Apple warns iPhone demand is lower than expected

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Apple 5g phones

One company that was making news on Thursday was Apple (NASDAQ: AAPL). The tech giant saw its shares plummet as investors reacted to some unusually bad news for the company, especially around this time of year. Apple had warned its suppliers that demand for its new iPhones was slower than expected and that Apple would need less parts over this holiday season.

According to a report from Bloomberg, Apple’s iPhone 13’s supposedly aren’t in demand as much as the company expected. It’s a bit of an alarming development, as sales during the holiday season tend to be at the highest for smartphones. Apple said that it would need to cut production by as many as 10 million smartphones down to 90 million.

Much of this is due to the ongoing semiconductor shortage, which has had lasting impacts across the country. Other sectors, like the automobile market, saw car production fall as well due to a lack of reliable chips.

However, there are also other reasons why Apple iPhone sales might be falling, despite being the Christmas season. The second explanation is that, now that lockdowns are over in the United States, many Americans have returned to their usual spending habits and now have less disposable income to spend on something like a new iPhone.

As lockdowns eased, spending returned on these experiential activities, so may be less for the new iPhone. We believe that (iPhone) demand is likely to be pushed out in 2022,” said Counterpoint Research analyst Tarun Pathak in a statement on Thursday.

Apple representatives refused to comment either way in regards to the news. While Apple seems to be struggling with reduced demand, other smartphone makers don’t seem to be having as many issues. From what we can tell, demand for Samsung and other smartphone makers has remained largely the same for them.

Shares of Apple were down 3.5% on the news, a pretty big jump for a trillion-dollar company. Since the year began, Apple has gained more than 26.5%, which is more or less exactly how the Nasdaq has performed over the same time period.

While most analysts are bullish on Apple’s future, it’s hard to justify lots of growth for a company that’s already as massive as it is. If anything, bullish investors are hoping that Apple’s new projects, including its rumored car brand, could give the company’s valuation a push in years to come.

 

Apple Company Profile

Apple designs a wide variety of consumer electronic devices, including smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Apple Watch), and TV boxes (Apple TV), among others. The iPhone makes up the majority of Apple’s total revenue. In addition, Apple offers its customers a variety of services such as Apple Music, iCloud, Apple Care, Apple TV+, Apple Arcade, Apple Card, and Apple Pay, among others. Apple’s products run internally developed software and semiconductors, and the firm is well known for its integration of hardware, software and services. Apple’s products are distributed online as well as through company-owned stores and third-party retailers. The company generates about 40% of its revenue from the Americas, with the remainder earned internationally. – Warrior Trading News

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