Monday , September 26 2022

Apple is reportedly already cutting iPhone SE production plans by 20 percent

While luxury electronics like the PS5 and graphics cards may still be selling out left and right, the demand may not be as high for easier-to-make budget offerings. According to a report from Nikkei Asia, Apple will be making 20 percent fewer iPhone SEs in the next quarter than it originally planned and 10 million fewer AirPods for all of 2022. Noted analyst Ming-Chi Kuo provided specific numbers in his note about the demand for the SE, saying that he expects Apple to ship 15 to 20 million SEs in 2022, as opposed to his previous estimate of 25-30 million (that’s somewhere between a 22 and 66 percent decrease for the year).

The reports don’t point to supply chain issues or chip shortages, which have plagued much of the electronics industry, as the reason for Apple walking back its production plans. Instead, they cite lower-than-expected demand for Apple’s latest budget-focused phone.

There are plenty of factors that could lead to people being less interested in the iPhone SE. Nikkei cites fears over the war in Ukraine and inflation, while CNBC mentions COVID lockdowns in China, making it physically harder for consumers there to get a new phone. Plus, speaking from personal experience, people who buy iPhone SEs aren’t necessarily the type to run out and upgrade the moment a new model is available. They may also be significantly less likely to do so when gas is anywhere from $4 to $6 a gallon.

The phone itself also costs more — the new generation SE costs $30 more than the last, seemingly thanks to 5G. That narrows the cost between it and, say, an iPhone 12 or 13 Mini (and the Mini lineup is already what the iPhone SE should be).

Of course, looking at retail price, the Mini is significantly more expensive, but the monthly prices are a bit of a different story. At Verizon, the SE is $11.94 a month for the 64GB model. You can get a 64GB iPhone 12 Mini for $16.66 a month or a 128GB iPhone 13 Mini for $19.44 a month. That price difference will matter to some, but there are also probably plenty of people who think, “What the heck, it’s just $5 a month extra.” And more price-conscious consumers may see the higher price and decide to stick with what they have for a few more months.

All of this is to say that this doesn’t automatically mean the new SE is a flop. Still, 20 percent is a big drop in production and could help set the reference point for the SE’s sales over the phone’s (likely multi-year) lifecycle. And while it’s too early to tell what this could mean for future generations of the SE, that discussion is probably already happening within Apple — if I’m being hopeful, maybe a lukewarm reception will push the company to try a Mini / Max approach for the next SE.

This Article was first published on theverge.com

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