Apple is reportedly scaling back iPhone SE production

A perfect storm of politics and supply chain issues is said to be hampering the production of the budget iPhone

Trade

iPhone SE

30 March 2022

Apple’s newest iPhone SE is already said to be suffering from production cuts, according to reports.

Sources familiar with the matter have told Nikkei Asia that the budget handset will see a 20% reduction in expected production due to a combination of the invasion of Ukraine and inflation.

The drop amounts to around 2-3 million handsets for the quarter, according to the sources, which is all the more surprising given that the phone was released just a couple of weeks ago.

Apple has previously stated that it would be halting all sales in Russia following the country’s invasion of Ukraine. Apple is routinely ranked as one of Russia’s top five smartphone brands, so this is believed to have a detrimental effect on iPhone SE production.

A bigger factor is the global chip shortage which is continuing to plague a number of industries and has further exacerbated by inflation issues brought on by the low numbers of available semiconductors and also the pandemic.

We have already seen reports of companies like Qualcomm struggling to meet demand, putting more strain on the lower end of the market. A similar problem now appears to be affecting Apple with production of the iPhone SE.

The problem has also affected other products, such as AirPods, production of which is said to have been reduced to around 10 million units for the whole of 2022. However, reports of a reduction in iPhone 13 production is said to be the result of seasonal demand fluctuations.

If true, this could be the first real hit Apple has taken over the chip shortage. Up till now, the company has enjoyed a sustained period of growth, with its latest earnings report showing a 9% increase, year-on-year, in iPhone sales.

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