Apple Cuts iPhone Production, Stock Slips (AAPL)

Jan 01, 2017, 00:17
Apple Cuts iPhone Production, Stock Slips (AAPL)

The company is reportedly cutting iPhone production by approximately 10%, according to the Nikkei Asian Review.

Nikkei said in November that while Apple reportedly asked Foxconn and fellow contract manufacturer Pegatron to explore the idea of making iPhones in the US, the odds of any big shift in production are still low.

In the report, Nikkei cites "sluggish" global sales for the iPhone 7 as the main reason behind the move.

Numerous firm's loyal customers are believed to be swerving the modest update served up in September. Therefore, this would be the second consecutive year where the company would pull back its production. As more and more people get acquainted to swift, the developer community surrounding Apple's ecosystem will also grow, leading to more apps and content for Apple products including iPhones, Apple Watch and TV.

iPhone 8 vs Galaxy S8 looks to be the smartphone battle of 2017: Who's your money on? The report pointed out that by locally manufacturing its products, Apple will be able to price them more aggressively as it will be exempt from the 12.5 percent additional duty. Foxconn is also an Apple supplier, which means, future iPhones will be manufactured by robots.

The Asia-focused publication also believes that Apple is facing increasing challenges in creating attractive new feature for their customers. Consequently, Apple shares traded in red, plunging about 0.78%, during active trading yesterday.

Interestingly, the Foxconn's Zhengzhou factory, which is now the largest production facility of the company, is now in the second stage of automation.

"Apple is one of the most underappreciated stocks in the world and has underperformed the market since the end of 2014", White said in a report.

Setting up facility is not the first biggest announcement Apple made for India.

The finance ministry had rejected an earlier proposal by Apple to set up wholly owned outlets in India, which sought exemptions from the compulsory 30 per cent local sourcing norm.

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