The iPhone is Apple’s cash cow, pumping out over 60 per cent of its revenue every year. So if Apple’s putting the brakes on iPhone production, implying a slowdown in sales sometime later this year, that could spell disaster for the world’s most valuable corporation.
A report in the Wall Street Journal claims exactly that: Apple’s iPhone production is slowing down. According to “three sources familiar with Apple’s supply chain”, the company has reduced orders to suppliers, leading to layoffs and idle capacity at Apple’s Chinese suppliers. The claims are backed up by a $12 million grant given to Foxconn, Apple’s primary iPhone manufacturer, by the Chinese government in order to minimise layoffs.
Falling iPhone sales are bad news for Apple and its gigantic profits: even more so than tablets or laptops, every smartphone that the company sells contributes to the bottom line. There aren’t really any new markets for Apple to push smartphones into, and the rise of cheap and excellent Android phones, combined with a lack of real innovation on new iPhones, could well signal a long-term slowdown in iPhone sales. [Wall Street Journal]