Apple, in 2022 is planning to flatten its iPhone manufacturing, taking a cautious approach as the smartphone industry confronts numerous challenges.
According to people familiar with business predictions, who wish to be anonymous, the company asked suppliers to keep the previous year’s target of around 220-million iPhones unchanged in 2022. However, the demand for Apple products in the current market exceeds the supply.
The mobile industry has had a terrible start in 2022, with output forecasts falling across the board. Inflation at its highest level in decades, a war in Ukraine, and supply chain disruptions all threaten to dampen sales in 2022.
Strategy Analytics estimated that smartphone sales might decline by almost 2% in 2022, and TrendForce’s full-year production prediction has been reduced twice in recent weeks.
Analysts from IDC and Bloomberg Intelligence both predicted 240 million iPhones earlier in 2022.
The California-based firm declined to comment on the outlook, which might alter in the coming months, depending on the economy and supply restrictions. Apple does not reveal its production targets or iPhone sales since 2019.
Apple’s shares dropped by almost 1.8% in premarket trading on Thursday.
The company had already warned that supply issues would reduce sales by $4 billion to $8 billion in the current quarter, owing to Covid-19 lockdowns causing production lines in China to stutter. Overall smartphone market shipments fell by 11% in the first quarter, and the third biggest smartphone manufacturer has reported a decline in revenue. Apple, however, is confident that its product sales will remain unaffected for too long, owing to its wealthy customer base and flourishing app ecosystem.
The entire tech industry is preparing for a slowdown in consumer spending as the cost of everyday necessities rises due to rising gasoline and materials prices.
Linda Sui, senior director at Strategy Analytics, said that geopolitical issues, price inflation, component shortages, exchange rate volatility, and covid disruption would continue to weigh on the smartphone market in the first half of 2022 before it eases out in the second half.