iPhone 6s, iPhone 6s Plus Face Production Cuts Due to Inventory Pileup: Report

Apple Inc is expected to cut production of its latest iPhone models by about 30 percent in the January-March quarter, the Nikkei reported.

As inventories of the iPhone 6s (Review) and iPhone 6s Plus (Review) have piled up since they were launched last September, production will be scaled back to let dealers go through their current stock, the business daily reported.

Apple’s shares were down 2.2 percent at $102.97 in afternoon trading. The stock has lost about a quarter of its value from record highs in April, reflecting worries over slowing shipments.

“This is an eye-opening production cut which speaks to the softer demand that Apple has seen with 6s out of the gates,” FBR Capital Markets analyst Daniel Ives said. “The Street was bracing for a cut but the magnitude here is a bit more worrisome.”

Shares of Apple suppliers Skyworks Solutions, Qorvo Inc and Cirrus Logic, among others, also fell following the report.

Other companies affected include Sony Corp, which makes image sensors used in iPhones, and electronic parts makers TDK Corp, Alps Electric Co Ltd and Kyocera Corp, the paper reported.

LCD panel manufacturers Japan Display Inc, Sharp Corp and LG Display Co Ltd will also be hit by the cut in production, according to the report.

Production is expected to return to normal in the April-June quarter, the Nikkei reported.

Tepid forecast by Apple suppliers such as Jabil Circuit, which manufactures casings for iPhones, and Dialog Semiconductor GmbH in December stoked fears that iPhone shipments could fall for the first time.

As well, consumers may not see the iPhone 6s and 6s Plus as enough of an improvement over its predecessors, some analysts have said.

Wall Street has also tempered its view on the high-flying stock in recent months. Since early December, about a third of the analysts tracked by Thomson Reuters have trimmed their estimates on Apple.

For fiscal 2016, Apple is expected, on average, to grow revenue by under 4 percent, a far cry from the 28 percent revenue growth it achieved in the fiscal year that ended last September.

Apple was not immediately available for comment. The parts suppliers cited in the Nikkei report were not available for comment outside their regular business hours.