Apple iPhone 6s and iPhone 6s Plus fail as lower shipments rattle investors, suppliers

By @preciousvsilva on
A man holds an iPhone 6s Plus as the Apple iPhone 6s and 6s Plus go on sale at an Apple Store in Los Angeles, California September 25, 2015. REUTERS/JONATHAN ALCORN
A man holds an iPhone 6s Plus as the Apple iPhone 6s and 6s Plus go on sale at an Apple Store in Los Angeles, California September 25, 2015. Reuters/Jonathan Alcorn

Apple's iPhone 6s and iPhone 6s Plus offerings garnered critical acclaim upon release but a new report says that the company will be scaling down on production. The move is expected to cause ripples across suppliers and investors considering the multi-billion dollar stakes in the industry.

A new report from Nikkie says that Apple will scale as much as 30 percent of its production during the January-March quarter. This is against its original plans as noted by a number of its parts suppliers. The decision is expected to be a big blow among South Korean and Japanese firms.

According to Reuters, reports on the increasing inventories and slowing shipments of the company's latest smartphone offerings have been exposing Apple investors to unchartered territory. Apple is now faced with alarming forecasts from suppliers as opposed to the on the roof sales and surging shares the company was accustomed to. 

"Chinese New Year is a big holiday and there is usually overtime for workers. But this year, Foxconn will have a normal break," explained one individual about Apple's state against the season.

Nikkei adds that Apple advised suppliers initially to manage production similarly to how inventories were produced and controlled during the iPhone 6 and iPhone 6 Plus period. However, inventories of the two new models are piling in different markets including Europe, Japan and China.

The lackluster sales have caused more inventories in stock. Not to mention the fact that customers saw little difference from the previous generation of smartphones to the current ones. Dollar appreciation in some markets also pushed prices up which did not help Apple at all.

Another report from The Wall Street Journal said that Foxconn’s Zhengzhou factory in inland China decided to put people on early holiday in December although the standard new-year holiday starts in February. The Chinese government also reportedly provided a US$12.6 (AU$17.84) million subsidy to keep unemployment in check.

Apple refused to comment on the matter saying that it refrains from discussing sales forecasts. It also claimed that any layoff concerns should be directed to the contract manufacturer. Foxconn also denied commenting if the subsidies received were in part because of declining iPhone sales.