New York: Apple Inc., suffering from a global supply crunch, is now confronting a different problem: slowing demand. The company has told its component suppliers that demand for the iPhone 13 lineup has weakened, signaling that some consumers have decided against trying to get the hard-to-find item.
Already, Apple had cut its iPhone 13 production goal for this year by as many as 10 million units, down from a target of 90 million, because of a lack of parts, Bloomberg News reported. But the hope was to make up much of that shortfall next year - when supply is expected to improve. The company is now informing its vendors that those orders may not materialize.
Record end-of-year sales
The company is still on track for a record holiday season, with analysts projecting a sales increase of 6 per cent to $117.9 billion in the final three months of the calendar year. But it won't be the blockbuster quarter that Apple - and Wall Street - had originally envisioned. Shortages and delivery delays have frustrated many consumers. And with inflation and the omicron variant bringing fresh concerns to pandemic-weary shoppers, they may forego some purchases.
That could mean skipping the iPhone 13 altogether and waiting to upgrade next year, when its successor comes out. The current lineup, which starts at $799 for the standard model and $999 for the Pro, is considered a modest update from the iPhone 12, which had a whole new design. Bigger changes are expected for the 2022 model, giving some shoppers a reason to wait.
Not much on discounts
With the iPhone 13, Apple and wireless carriers unleashed aggressive rebate programs to spur purchases. In some cases, owners of an iPhone 12 or earlier models were able to buy an iPhone 13 at little to no cost. While discount programs are still available, some offer less dramatic savings than when new models first went on sale.
During Apple's last earnings call in October, CEO Tim Cook said that demand for new products was "very robust" - fueled by interest in the latest iPhones, iPads and other devices - and that the company was on track for a record holiday quarter. It had sales of $111.4 billion in the year-earlier period.
He pointed to supply constraints as the company's biggest challenge. Cook predicted that the struggle to get enough components, particularly chips, would cost Apple more than $6 billion in revenue during the holiday quarter.
Easing up on spend
And there's now more strain on shoppers' pocketbooks. US consumer prices rose last month at the fastest annual pace since 1990. Surging costs for food, gas and housing are eroding purchasing power despite stronger wage growth.
Meanwhile, the iPhone 13 isn't as hard to get as it once was. Apple shoppers in the US had been waiting about a month for the much-prized Pro model to be delivered. Now wait times are down to two weeks or less.