Apple Falls on Report iPhone Output Cut for Second Quarter

Apple Reportedly Extends iPhone Production Cut
  • Nikkei says 30 percent decrease in production to be extended
  • Smartphone sales stall in advance of new model rollout

Apple Inc. shares fell after it was reported that the company would extend an estimated 30 percent cut in iPhone production for another three months.

Slower-than-expected sales of the iPhone 6S and 6S Plus have prompted Apple to reduce its orders, the Nikkei Asian Review reported, citing unidentified suppliers. The shares dropped as much as 2.1 percent and had declined 1.7 percent to $110.22 at 2:07 p.m. in New York.

Apple introduced a smaller, cheaper handset dubbed the iPhone SE last month in an effort to plump up sales ahead of rolling out a new flagship model later this year. Taiwan Semiconductor Manufacturing Co., one of the biggest suppliers of chips to Apple, on Thursday forecast revenue below analysts’ estimates for the second quarter, saying that demand for smartphones that cost more than $500 is waning.

“Ahead of the iPhone 7 people are holding onto their phones a little longer,” said Walter Piecyk, a New York-based analyst at BTIG LLC who recommends buying Apple shares. “But if this is as a result of lengthening product cycles then it could be a structural change for the industry.”

In January, Apple said sales would decline for the first time in more than a decade. Global smartphone sales will rise by less than 10 percent this year, the smallest increase since the market’s inception, researcher Gartner Inc predicted last month.

Nikkei reported that Apple cut iPhone production by an estimated 30 percent in the January to March quarter and that the reduction is being extended for the subsequent three months. Apple suppliers including Broadcom Ltd., Qorvo Inc., Knowles Corp. and NXP Semiconductors NV also fell following the report. An Apple spokesman didn’t immediately respond to requests for comment.

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