Blockbuster report says demand for iPhone 14 series is less than what Apple expected

No sooner did we tell you about Apple's plans to move production of the basic iPhone 14 and iPhone 14 Plus from China to India, than we followed that up by informing you that Apple planned to tweak its production in China to build more of the pricey iPhone 14 Pro and iPhone 14 Pro Max. But now Apple has got some 'splaining to do after a  shocking report from Bloomberg says that Apple has asked suppliers to cut production of the iPhone 14 line up by 6 million units due to a lack of demand.

This is a blockbuster report because all indications were that Apple was experiencing heavy demand for the more expensive Pro models. In fact, at one point during the pre-order period, the lead time on the iPhone 14 Pro Max was 36.5 days. That means those pre-ordering the phone would have to wait just over five weeks for it to arrive; this was the longest lead time for an Apple product in six years and was indicative of the heavy demand for the model.

Apple's new target, according to those in the know, is to produce 90 million phones for the second half of this year, approximately the same total produced during the same period last year, and flat with Apple's original estimate made earlier in the summer. As we stated in our earlier story, the iPhone 14 Pro and iPhone 14 Pro Max are outselling the basic non-Pro variants and Apple is shifting production from low-priced phones to more expensive ones. So we're happy to say that this story doesn't change the previous one.

Apple had been in touch with suppliers during the weeks before the phones were released on September 16th (except for the non-Pro 6.7-inch iPhone 14 Plus which will be released on October 7th with the best battery life of any iPhone ever made). This unexpected news could wreak havoc with Apple's supply chain which includes big companies that depend on the iPhone for revenue.

Such firms include chip foundry TSMC which counts Apple as its number one customer. Contract manufacturer Foxconn also relies heavily on iPhone production to butter its bread. China, the world's largest smartphone market, is in the midst of an economic slump that has seen iPhone sales decline by 11% on an annual basis during the handsets' first three days of availability this year in China. To be clear, this is an 11% decline compared to sales of the iPhone 13 series after three days of availability in China last year. That data was passed along by brokerage firm Jefferies in a note to clients on Monday.

Weak iPhone demand is merely just a part of a global softening of demand for consumer electronics products. Global inflation, fears of a recession, the beginning of a U.S. Bear Market, and the war in Ukraine are seen as events that are expected to push down global smartphone demand by 6.5% this year to 1.27 billion units according to analytical firm IDC. Nabila Popal, research director at IDC, released a statement.

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Popal said, "The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market. High inventory in channels and low demand with no signs of immediate recovery has OEMs panicking and cutting their orders drastically for 2022."

The soft demand for the iPhone 14 lineup could also be partially due to the lack of any major changes in the iPhone 14 from the iPhone 13. Apple did get rid of the mini version of the iPhone, replacing it with a 6.7-inch non-Pro model it calls the iPhone 14 Plus. This  phone could end up being a decent seller since it has the best battery life of any iPhone in the history of the device.

But as we said, the iPhone 14 Pro and iPhone 14 Pro Max are outselling the basic models. One reason for this could be Apple's replacement for the notch, a notification center called the Dynamic Island. For now only available on the Pro models, this is a shape-shifting "notchification" platform that turns the area once known as the notch into a useful tool for multitasking iPhone 14 Pro users.