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Apple's hiring and spending cuts shouldn't affect its production plans

Published: Jul 19, 2022, 12:46 PM

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Apple's hiring and spending cuts shouldn't affect its production plans

It was recently reported that Apple intends to slow hiring and spending across some teams next year in response to an economic downturn. Now, analyst Ming-Chi Kuo has clarified that this shouldn’t affect the company’s production plans.

Apple’s cutting spending, but it shouldn’t affect production

Kuo states that his latest checks show there have been no significant changes to Apple’s hardware development plans for 2023. In fact, the situation looks almost unchanged regarding the next 18-24 months of supply. The information suggests that while Apple may be implementing a more cautious approach when it comes to spending and hiring, it’s still full steam ahead with its hardware plans for the foreseeable future.

This lines up with Bloomberg’s recent report, which mentioned the company’s plans for an “aggressive product launch schedule” next year. The most important product expected to arrive within the next 12 months is Apple’s first mixed reality headset.

While it won’t be positioned as a mainstream device, primarily due to its high price tag and its focus on VR capabilities, the headset is set to mark the culmination of years of research and development. It should also mark a new phase for Apple, with the end goal being to produce a more affordable pair of AR glasses that the industry (and maybe even Apple) is viewing as a potential future iPhone replacement.

Apple is looking to reduce headcounts and spending across some teams

While it’s unclear which teams will be directly impacted by Apple’s more cautious spending plans, Bloomberg reported that the company is giving some divisions lower-than-expected budgets for next year. The main impacts of this include a refusal to increase the headcount next year for certain groups, compared to the usual trend of adding between 5% and 10% more employees.

Other teams will be left without replacements for departing employees. On the brighter side, Apple is reportedly planning a larger compensation budget to afford higher salaries for employees and maintain a competitive edge in an increasingly tight labor market.

Lots of products are coming at the end of 2022

While the focus is increasingly shifting towards next year, Apple is planning a massive range of new products for release by the end of 2022. These include three new Apple Watch models, one of which could cost as much as an iPhone, revamped MacBooks, and a new Apple TV.

Of course, the biggest arrival will be that of the iPhone 14. Ming-Chi Kuo reported earlier today that some supply chain issues are being experienced in relation to memory chips and display panels. However, the overall impact on production should be limited.

The current expectation is that demand for the iPhone 14 will exceed that of the iPhone 13, which in turn was higher than iPhone 12 demand. The main reason for this seems to be Apple’s decision to kill off the mini model. In its place, the company is set to introduce a new 6.7-inch iPhone 14 Max variant that’ll target customers looking for a larger device on a slightly tighter budget. Essentially, those who aren’t willing to purchase an iPhone 14 Pro Max.

The appetite for such a device has been evident for quite some time, with the iPhone 13 Pro Max consistently outselling the smaller Pro model. But in China, demand could be even more exaggerated. The iPhone 14 and iPhone 14 Pro lineups are scheduled to debut in mid-September, with a release following a couple of weeks later. A price hike is expected, which could push the iPhone 14 to $899 and the iPhone 14 Pro to $1,099, with the Max variants costing an additional $100.