Apple (AAPL) Stock Dips on Report It Expects Flat iPhone Production This Year

May 26, 2022 5:42 AM EDT
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Apple (NASDAQ: AAPL) intends to keep the iPhone production relatively flat in 2022 as the tech giant, as well as the broader smartphone industry, continue to face headwinds this year.

Apple has reportedly told suppliers to produce around 220 million iPhones this year, almost the same as the number of iPhones assembled last year, according to Bloomberg News.

This compares to the analysts’ expectations of about 240 million units, fueled by the release of the new iPhone in the fall. However, the smartphone industry has been facing challenges since the start of the year, forcing Apple and its peers to reconsider their production targets.

Furthermore, the inflation’s jump to its 40-year high, geopolitical tensions, and supply chain constraints continue to hurt the corporations’ sales in 2022, with some estimating that total smartphone shipments will shrink 2% this year.

Market research firm TrendForce has slashed its full-year production estimates twice over the past few weeks.

Apple has previously warned that supply chain constraints could dent its sales by $4 billion to $8 billion in the current quarter as the coronavirus-induced lockdowns continue to impede the company’s production lines in China.

In addition, the broader tech industry is also expecting a significant slowdown in consumer spending as higher fuel and raw material costs hurt demand.

“This year will be a tale of two halves,” said Linda Sui, a senior director of Strategy Analytics.

“Geopolitical issues, component shortages, price inflation, exchange rate volatility, and Covid disruption will continue to weigh on the smartphone market during the first half of 2022, before the situation eases in the second half,” Sui added.

Apple stock price is down 1.5% in pre-open Thursday.

By Senad Karaahmetovic

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