On March 8th, Apple held its first major hardware reveal event of the year. During the event, the third-generation iPhone SE made its debut, complete with an updated processor and 5G support. But those upgrades might not be as tempting as Apple expected. According to two reliable sources, Apple plans to slash production orders for the new iPhone SE due to weak demand for the budget device and the ongoing war in Ukraine.
Weak demand for the new iPhone SE
Nikkei Asia reported on Monday that Apple will make 20% fewer iPhone SE units next quarter than originally planned. Four people told the publication that Apple is telling suppliers that it will decrease its orders by two to three million units. Apple also reportedly reduced its orders for AirPods by more than 10 million units for the rest of 2022.
Nikkei Asia also offered a detailed explanation for the cuts to production in 2022:
These moves by the world’s most powerful chip and component procurer underline the mounting pressure on the tech industry following the onset of the Russia-Ukraine war, which has compounded the yearslong chip shortage that has hit a string of industries from smartphones to PCs to automobiles. Numerous governments, from the U.S. and the EU to Japan, South Korea and Taiwan, have imposed economic sanctions against Russia over its invasion of Ukraine, and the supply chain has been rocked by turmoil in the oil, energy and raw materials markets. The looming inflation risks further adding to people’s living costs and creates concerns over demand for consumer electronics products.
More evidence from a top analyst
Around the same time Nikkei Asia’s report arrived, TF International Securities analyst Ming-Chi Kuo chimed in as well. Kuo claims that Shanghai’s recent lockdown due to COVID surges did not affect Apple’s iPhone SE production plan. Rather, demand is simply lower than Apple expected, as Nikkei’s sources suggested. As a result, Kuo cut his 2022 shipment prediction for the third-gen iPhone SE from 25-30 million to 15-20 million:
The second-generation iPhone SE launched four years after the original. In addition to its more powerful hardware, the design evolved to match that of the iPhone 8. The notch was also still relatively new, having debuted on the iPhone X in late 2017. Now, two years later, the iPhone SE 3 has arrived, and it looks virtually identical to the iPhone SE 2.
Specs aside, the iPhone SE 3 has the same 4.7-inch display, the same 12-megapixel camera, and the same design as the iPhone 8. As noted above, there are clearly many factors at play influencing demand for the latest iPhone, but the predictable design isn’t helping.
Thankfully, consumers might not have to wait long for a more modern iPhone SE. Rumors suggest that Apple is working on a fourth-generation iPhone SE with a much larger 5.7-inch or 6.1-inch display and a notch. We could see this phone as early as next year, but Apple might decide to hold off until 2024 for its next iPhone SE.
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