Apple shares took a dip in early trading Tuesday, after an analyst report claimed that the firm is planning to cut production of the iPhone by 20 percent in the second half of the year.
As CNBC reported, analyst Brian Blair of Wedge Partners said in a note that the firm has cut smartphone production by a fifth — planning to make between 90 million and 100 million rather than an original projected range between 115 million to 120 million. The cuts, the report said, include production for the iPhone 4S, iPhone 5 and as-yet unreleased (and unconfirmed) next generation of the iPhone.
Apple shares, which opened at $413.60 per share, dipped as low as $410 .38 within a half-hour of the market open, though the stock recovered as was trading at around $419.20 in early afternoon trading Friday.
Blair said the lower production is a reaction to the overall slowdown of the premium smartphone market. Apple’s perceived slowdowns tend to face closer scrutiny than those of other firms — particularly amid lingering questions about its ability innovate since the 2010 death of co-founder Steve Jobs — but news of a slowing phone sales should sound familiar to anyone paying attention to earnings from Samsung and HTC last week.
Both smartphone firms projected lower-than-expected sales that escalated worries that the high end of the smartphone market has reached a peak. A majority of Americans now own smartphones and there has been considerable grumbling that the last couple of models from manufacturers such as Samsung or Apple have been more evolutionary than revolutionary.
With growth poised to jump most in emerging smartphone markets such as China, Latin America and Eastern Europe, analysts say that there will be more demand among these first-time smartphone owners for cheaper phones, rather than top-of-the-line models.
That projected lull is spooking investors across the industry and has hit not only manufacturers such as Samsung and Apple, but also chip makers such as Qualcomm, which also saw its shares slide early last month when analysts first began projecting that Samsung earnings could disappoint.
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