Apple slows production of new iPhone after weaker-than-expected demand

iPhone 14 - Andrew Kelly/Reuters
iPhone 14 - Andrew Kelly/Reuters

Apple has cut production of the iPhone 14, after price hikes for its non-US customers and surging inflation around the world led to weaker-than-expected demand.

The company has cut production targets by up to six million units, according to anonymous suppliers who spoke to Bloomberg.

Production of the iPhone 14 will total around 90 million handsets, keeping it in line with previous models. Apple had previously planned to boost production, predicting an increase in demand after the Covid pandemic led to two years of weak uptake.

Instead, analysts say soaring inflation and the rising risk of recession means more consumers will hang onto older phones for longer instead of upgrading, partly fuelled by higher prices for the latest iPhone models.

Apple has raised the price of its latest smartphone by an average of 16pc across the UK and EU. The latest iPhone 14 Pro, its flagship device, starts from £1,099 compared to £949 for the iPhone 13 Pro, Apple’s main high-end phone last year.

Paolo Pescatore of PP Foresight said: “Moving forward, people will be forced to make some tough decisions regarding the need to buy any new connected device or service. Let’s not forget consumer behavioural patterns have changed considerably over the last few years and will continue to do so.”

Apple did not respond to a request for comment.

The Californian tech giant has been shifting production of its iPhones and other devices away from China in recent years as part of efforts to diversify its supply chains. Some Apple production facilities were forced to shut during the pandemic because of local outbreaks.

JP Morgan analysts said recently that Apple is expected to move 5pc of global iPhone 14 production to India by late 2022, and expand manufacturing capacity there to make a quarter of all iPhones by 2025.

Vietnam is also in talks to produce Apple Watches and MacBook laptops, albeit under the control of China’s Foxconn, one of Apple’s major manufacturing partners.