Faced by growing stocks of unsold iPhone 6 smartphones around the world, Apple is preparing to trim production of the devices by about 30 percent through March.
The development, which is causing market drops in the shares of Apple and its suppliers, was revealed in a Jan. 6 report by business news source Nikkei. The production cuts by Apple were discussed by several of the company's parts suppliers who were not named in the story.
Apple "initially told parts makers to keep production of the iPhone 6s (pictured) and 6s Plus for the quarter at the same level as with their predecessors—the iPhone 6 and 6 Plus—a year earlier," but those plans changed because of growing inventories of unsold phones, the story reported. "Customers saw little improvement in performance over the previous generation, while dollar appreciation led to sharp price hikes in emerging markets."
The production cutbacks will allow remaining iPhone inventories to be reduced in the meantime, the story said. The move by Apple will likely affect iPhone component suppliers including Japan Display, Sharp and LG Display, which make liquid crystal displays; Sony, which makes image sensors; and TDK, Alps Electric and Kyocera, which supply other electronics components, the story reported.
A similar iPhone production cut was made by Apple in 2013, which caused companies that make iPhone components to find other revenue sources until iPhone production returned to higher levels, Nikkei reported.
The Apple production cut reports led to a 2.5 percent drop in Apple shares, according to a Jan. 6 story by The Guardian. Apple's stocks have lost about a quarter of their value from record highs in April, reflecting worries over slowing shipments, the paper reported.
"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 told The Guardian. "[Wall] Street was bracing for a cut but the magnitude here is a bit more worrisome."
Apple's latest iPhone 6s and 6s Plus smartphones went on sale last September. The iPhone 6s includes a 4.7-inch display, while the 6s Plus has a 5.5-inch display, both of which are wrapped in a new stronger cover glass. Both new phones are built around Apple's fastest smartphone chip, the A9, which is a third-generation 64-bit chip. The cameras on the latest devices received a major upgrade with the addition of a new 12-megapixel iSight camera that has 50 percent more pixels than earlier devices. Both phones also are now capable of 4K video, run on iOS 9 and include new 5MP FaceTime HD front cameras.
In December, reports circulated that Apple is applying for a patent for a technology that could allow the company to build waterproof iPhones in the future by protecting external headphone ports and charging cords with special self-healing rubber receptacles, according to an earlier eWEEK story. The patent application, which was posted by the U.S. Patent and Trademark Office on Dec. 10 after originally being filed by Apple on June 9, 2014, could be a hint of a future feature in the company's flagship smartphones.
The application describes the innovation as a "self-healing elastomer applied over one or more external electronic connectors," which would protect internal electronic connectors used to plug in external headphones or charging cords. The special self-healing elastomer, which is essentially rubber, would then be pierced temporarily by an incoming plug on a headphone cord or charging cord to allow the connection to be made, according to the application. When the cord is removed, the self-healing rubber material would regain its original shape to again block the port, making the device safe from water penetrating into the device.
Other smartphones have been sold that are waterproof, including models from Samsung, but iPhones do not yet have the feature.
Earlier in December, reports surfaced that Apple could be looking at dropping the long-established 3.5mm headphone jack on its next iPhones and replacing it with a thinner Lightning connector or Bluetooth to help make the phones even thinner, according to another eWEEK story. Even if Apple does delete the headphone jack, the company's patent application to seal iPhone ports could still be useful.