Apple to cut iPhone SE 5G production by 2 million units due to low demand
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It appears Apple is struggling to sell its latest iPhone SE (2022), and will cut production by 20% for the next quarter, according to the latest reports.
A report from Nikkei Asia states demand for the new iPhone SE 5G has been much lower than expected, with Apple informing suppliers it will cut production from 5 million to 3 million units for the next quarter. Ming-Chi Kuo, an Apple analyst who has an accurate track record, estimates production for the whole of 2022 will drop from 25-30 million to 15-20 million units.
Although there is no definite reason as to why demand is so low, we know the production of the new iPhone SE has been unaffected by the recent chip shortage. However, there are a number of speculative reasons for the low demand.
Despite the first in the series to support 5G, the dated design may be far too off-putting for consumers, especially when compared to budget Android phones, which often have modern designs with slim bezels. Apple’s stubbornness for not updating the design is rather unusual - although likely to be a cost saving measure, it appears to be backfiring considerably. Perhaps if Apple did change the design, demand wouldn’t be as low and the additional cost for updating the design would pay itself off.
Furthermore, the ongoing Russia-Ukraine war has dented consumer confidence, with consumers less likely to make new purchases as the cost of living rises. The war has affected several markets, with speculation that inflation will get worse before it gets better.
Following the war, Apple almost immediately pulled sales from Russia, which has likely dented demand even further. Russia is a huge market for Apple, with the iPhone being the third most popular phone in the country. Apple sold an estimated 5 million iPhones in Russia last year, with a 16% market share. In addition, budget phones like the iPhone SE are more popular in non-Western countries, especially when compared to premium flagships like the iPhone 13.
The report from Nikkei Asia also states that AirPods have also taken a demand hit, with Apple cutting production by 10 million units for the whole of 2022. More surprisingly, iPhone 13 production has been cut by 2 million units than originally planned, however this is apparently due to ‘seasonal demand’.