How Apple Plans to Adjust to the New Reality?
Apple and other big companies have to cope with numerous issues on a regular basis. The tech giant is planning to lower iPhone and AirPod production due to a demand slowdown caused by the war in Ukraine and rising inflation.
It reportedly asked suppliers to reduce the production of the iPhone SE, its new $429 budget 5G phone. The company asked suppliers to cut production by about 2 million units to 3 million units, or about 20% of the initial orders. The tech giant also reduced orders for AirPods by about 10 million units for the entire year 2022.
Apple and its plans
Apple’s budget-friendly iPhone SE isn’t as popular as its more expensive iPhones. According to Counterpoint Research, the 2020 version of Apple’s iPhone SE accounted for 12% of all iPhone sales from its launch until Q4 2021.
Unfortunately, the war in Ukraine is not over yet. As a reminder, several major tech companies, including Apple, halted sales in Russia following its invasion of Ukraine. Many countries imposed economic sanctions on the Russian Federation for the invasion, disrupting the supply chain and increasing inflation risks.
In the meantime, JPMorgan said iPhone SE sales may be limited in China. Covid restrictions imposed by authorities complicated the situation for Apple and its customers.
Apple launched its budget-friendly iPhone SE on March 18. While marketed as a budget smartphone, the model’s $429 price tag is still a surprising hike from the $399 model the company launched in 2020.
The company’s smartphone market share in China jumped in the fourth quarter of 2021. As a result, Apple sold more smartphones than its competitors for the first time in six years. However, it won’t be easy to compete with local players. Companies in China and India have the ability to challenge Apple’s dominance. Furthermore, local tariffs could hurt the company’s ability to compete in India and China.