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Does an iPhone production cut suggest a sales slump?

  • ByZDNet2017-01-03 11:56:11

The typical iPhone sales pattern following the launch of a new handset is that it will sell like mad for the first few months, and then start to tail off as the pent-up interest begins to wane.

According to suppliers talking to Nikkei, Apple is planning to cut iPhone production by 10 percent during the first quarter of 2017.

According to the report, the cuts affect both the iPhone 7 and iPhone 7 Plus lines.

Now 10 percent sounds like a big cut, but if you hark back to January of 2016 you'll remember that Apple cut production by around 30 percent, and while iPhone sales did go soggy over 2016, the decline was nowhere near as severe as the production cut initially suggested.

Back then I suggested that one factor to bear in mind was that Apple had ramped up production of the iPhone 6s and iPhone 6s Plus in 2015 in order to minimize delays and cater for China being part of the day 1 launch, and that a good part of that 30 percent cut was nothing more than an adjustment to cater for that.

It's likely that a portion of this 10 percent cut is merely to bring iPhone 7/7s production down to what is expected at this point in the handset's lifecycle.

But the bottom line is that we'll know more once we get the Q1 figures in. If they're good, then this cut in production is likely nothing more than a planned adjustment, but if they're not so good then it could be yet an interesting year for Apple.

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