NEW YORK, Sept 28 (Reuters Breakingviews) – Apple (AAPL.O) may learn that its moat isn’t as wide during times of high inflation. The $2.4 trillion company led by Tim Cook put on ice plans to increase production of the newly launched iPhone 14 – which starts at $800 – because of softer demand, according to Bloomberg, citing people familiar with the matter. When wallets are pinched, a new iPhone probably isn’t a must-have.
Apple was planning on increasing production of the iPhone 14 by as much as 6 million units, but instead, the company will target 90 million phones for the second half of the year, roughly the same level as the prior year and in line with Apple’s original forecast in the summer, Bloomberg said. The strength of the U.S. dollar probably hasn’t helped. As other currencies have weakened relative to the dollar, Apple has had to raise prices to keep the cost steady relative to America.
Already Apple’s share of the global smartphone market has declined sharply to 16% in the second quarter from 23% penetration in the fourth quarter last year, according to research firm IDC. As the cost of food, utilities and rent soars, people may reconsider what is a necessary item. (By Jennifer Saba)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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