Key takeaways:
- Apple is cutting the production numbers of its recently launched iPhone 14 as demand for it did not meet the company’s expectations.
- Its top markets, the Americas, Greater China, and Europe, are experiencing economic downturns.
- All smartphones manufactured globally are expected to fall from 1.39 billion to 1.36 billion.
Apple is reducing iPhone 14 production as the demand for the phone fell below expectations. The phone, released in an elaborate Apple-style launch event, is reportedly performing worse than the third-generation iPhone SE, which had its supply cut by 20%.
According to Bloomberg, Apple initially had plans to increase production of this year’s iPhone 14 line-up, but it has since gone back on its plan and told suppliers to cut production back by 6 million units.
Tech review website MacRumors also corroborated Bloomberg’s report with data from SellCell, which shows that the iPhone 14 and 14 Plus are performing twice as bad as the iPhone 13 and iPhone 13 mini in the same 10-day period after launch.
Demand for the iPhone 14 with 512 gigabytes of storage is the worst performer in the line-up. In the 10-days after launch, the demand for it dropped by over 40%.
Interestingly, the more expensive iPhone 14 Pro and 14 Pro Max are not doing badly. In the 10-days after its launch, the iPhone 14 Pro Max has had its demand drop by just 19.6%, which is slightly better than last year’s iPhone 13 Pro Max.
Economic downturns are affecting Apple’s sales
Apple’s biggest markets — the Americas, Greater China and Europe — are currently going through tough economic times.
According to Statista, the Americas is the most significant contributor to Apple’s sales. In Q3 2021, the region generated a revenue of $35.8 billion which was 44% of its revenue globally.
However, inflation in the region’s biggest economy — the US — is at a 40-year high. According to Guardian, consumer confidence levels which measure the level of optimism or pessimism of consumers toward the country’s financial situation, are at a record low.
Economics Professor Kenneth MacLaughlin told Al Jazeera that one of the reasons for high inflation in the US is the injection of trillions of dollars in stimulus checks into the economy during the COVID-19 pandemic.
Europe is another of Apple’s biggest markets, raking in $18.94 billion for the company in Q3 2021, 23.3% of the company’s revenue during the period.
Like the US, Europe is also facing economic problems. The Russia-Ukraine war has reduced economic growth in the European Union by 1%.
According to the European Investment Bank, “further trade disruptions or increased economic sanctions could plunge the European economy into recession.”
Greater China, which includes China, Hong Kong, and Taiwan, was responsible for 18% of Apple’s revenue in Q3 2021, generating $14.8 billion.
China, the biggest smartphone market in the world, is also experiencing an economic slowdown. Lockdown in the country’s major cities led to a 2.7% drop in its Gross Domestic Product (GDP).
Where does Africa fall?
The African smartphone market barely makes a dent in Apple’s global revenue. However, the global smartphone market is expected to shrink in 2022 to 1.36 billion units from 1.39 billion units.
While Africa does not significantly impact Apple’s revenue, 19.7 million smartphones were shipped into the continent in Q1 2022, and Chinese smartphone manufacturer Transsion sells more phones in Africa than any other company.
Featured image: Photo by Jeremy Bezanger on Unsplash
