In recent weeks, Apple have announced their plans to cut the production of their three newest iPhone models, originally released back in September and October of this year. The three models, the iPhone XS, iPhone XS Max, and iPhone XR, are rumoured not to have reached the demand they were expected to, so Apple Inc. have made the decision to cease production of these models to mitigate against any financial loss.
Apple have shocked investors after the sales forecast for the Christmas period was lower than expected. A number of suppliers have been affected by the decision to cut production so abruptly. According to research, Apple’s shares were down by 3.7% at $186.38, resulting in suppliers also being down by 2.7% to 6% between them. It is evident that Apple’s decision to offer more models has resulted in it being a lot more difficult to anticipate the number of components and handsets the company actually needs.
Although all three new models are being cut from production, it’s particularly the iPhone XR that has proved the most problematic since its release in October of this year. Apple decided to cut nearly 70 million units some suppliers had been asked to produce between September and February; and it was only last week that Apple informed several of its suppliers their decision to lower the production of the iPhone XR even further.
However, Apple’s decision will surely be a positive one for the future. Some sources are saying that their decision could definitely be as a result of Apple’s changing strategy, which more recently has focused on raising the amount of money it makes from each device, instead of driving prices lower to increase sales numbers. It was Apple’s iPhone X, released late last year, that has been the most recently successful model. Their first 2018 earnings report earlier this year showed an 11% increase in revenue following the release of the iPhone X.