foxconn production

Japanese and South Korean component suppliers are bracing for a significant drop in their business with Apple, reports Nikkei. Citing lackluster sales, the outlet claims that the Cupertino firm is expected to reduce output of its latest iPhone models by around 30% for the January-March quarter.

“The U.S. company had initially told parts makers to keep production of the iPhone 6s and 6s Plus for the quarter at the same level as with their predecessors. But inventories of the two just-launched models have piled up at retailers in markets ranging from China and Japan to Europe and the U.S.”

The publication goes on to say that output will be scaled back to let retailers go through their current stock, and production is expected to return to normal in the April-June quarter. Until then, Japan Display, Sharp, Sony and other part-makers are going to have to find ways to cope with the drop-off.

While Nikkei is well-sourced, previous reports of iPhone supply chain cuts have rarely (if ever) materialized in lower-than-expected Apple handset sales. In fact, Tim Cook himself has said on multiple occasions that it’s impossible to garner any real intel on Apple’s performance from supply chain chatter.

We’ll find out soon enough. Apple on Monday announced that it will be sharing its Q1 2016 financial results on January 26.

Source: Nikkei