Employees at Apple’s suppliers in China are facing layoffs, the Wall Street Journal reports, as the Cupertino company reportedly cuts iPhone production by 30%.
Over the last month or so, speculation has mounted that Apple is going to report disappointing sales of the iPhone 6s, its latest smartphone.
Every year, the latest iPhone has sold more than the one before it. But rumours and signs from Apple’s supply chain suppliers suggest that in 2016 — for the first time ever — we might see a year-on-year decline in sales of the iPhone.
In December 2015, Dialog Conductor, which supplies chips for the iPhone, posted new guidance. Apple drives 75% of Dialog’s revenue, and the company reduced Q4 guidance from $430 million (£286 million)-$460 (£306 million) to $390 million (£259 million)-$400 million (£260 million). This suggests Apple is lowering its orders — a potential indicator the iPhone is going into decline.
These rumoured lower sales are by no means confirmed, and Apple so far hasn’t commented. But analysts from Morgan Stanley, Stifel, Baird, and Credit Suisse are among those who are predicting a decline.
On Tuesday, Nikkei reported that Apple is cutting production of the new handset by 30% in the January to March quarter.
The Wall Street Journal then followed this up with its own report about Apple supplier Foxconn. The company is reportedly getting government subsidies — $12 million (£8.1 million)-worth — to stave off layoffs due to a lack of demand. Some Foxconn employees were apparently sent home for Chinese New Year early because there wasn’t enough for them to do.
Apple and Foxconn did not immediately respond to requests for comment.
Regardless of the truth of the rumours, investors are getting jittery. Stock closed down 2.5% on Tuesday. At $102.71 (£70.16) a share, it’s reaching the $100 (£68) mark — a level it hasn’t been below since October 2015, USA Today reports.
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