Apple asks suppliers to make fewer parts as consumer demand slows

January 4, 2023 1:32 am

Apple has notified several suppliers to build fewer components for AirPods, the Apple Watch and MacBooks for the first quarter, citing weakening demand, Nikkei Asia reported.

One anonymous manager at an Apple supplier told Nikkei Asia that Apple has alerted his company to lower orders for almost all product lines actually since the quarter ending December, partly because the demand is not that strong.

"The supply chain in China is still trying to cope with the latest abrupt policy turns, which brought a shortage of laborers because of the sharp COVID-19 surges," the manager added.

Another Apple supplier, Wuxi Huansheng Precision Alloy Material, told Nikkei Asia that the decrease in orders near the end of the year is a normal phenomenon and will not have much impact on the overall order fulfillment. The company also said that they had faced production disruptions in mid-Dec. due to the surge in COVID-19.

Weak consumer demand has hampered global smartphone shipments. According to the latest Worldwide Quarterly Mobile Phone Tracker forecast, shipments of smartphones set to decline 9.1% in 2022, a reduction of 2.6 percentage points from the previous forecast.

"We believe the global smartphone market will remain challenged through the first half of 2023, with hopes that recovery will improve around the middle of next year and growth across most regions in the second half," said Ryan Reith, group vice president with IDC's Worldwide Mobility and Consumer Device Trackers. 

Despite the gloomy economic outlook, tech makers have been reluctant to lay off workers for fear of labor shortages. Manufacturers in Apple's supply chain, including the world's largest iPhone maker Foxconn, Jabil, Pagatron and LY iTech, recently raised wages and bonuses for workers, Nikkei reported.