Apple Inc. (NASDAQ:AAPL) saw its shares decline approximately 2% in premarket trading on Friday, following a report that the tech giant has requested some component suppliers to reduce orders for its latest iPhone 18 Pro and iPhone 18 Pro Max models. The news has sparked concerns about consumer demand for Apple's premium smartphones.
According to a report from Nikkei Asia, Apple has instructed certain suppliers to cut component orders for October by at least 15%, with some estimates suggesting reductions could range between 15% and 20%. This adjustment comes as the company grapples with escalating memory costs and worries that recent price hikes on its high-end iPhones may be deterring potential buyers more than anticipated.
Memory Costs and Demand Pressures
The softer-than-expected demand is partly attributed to rising memory prices, which have surged amid the artificial intelligence boom and contributed to global chip shortages. These higher costs are now beginning to impact the smartphone and personal computer sectors. Apple has passed on these increases to customers, potentially making its latest devices less attractive to price-sensitive consumers.
Apple launched the iPhone 18 Pro and iPhone 18 Pro Max last month, raising prices for its Pro models by $100 globally compared to the previous generation. The reported production adjustments could signal that demand has not matched the company's expectations following the launch, although the full extent of the slowdown remains unclear.
Implications for Apple's Foldable iPhone
Concerns about iPhone 18 Pro demand also raise questions about the reception of Apple's first foldable device, the $1,999 iPhone Duo, ahead of its retail launch later this month. An earlier report indicated that initial production of the foldable iPhone remains limited, with the company targeting production of 8 million to 10 million units this year. If production does not accelerate, Apple could fall short of that target, according to the report.
Analyst Sentiment and Upcoming Catalysts
Despite the premarket decline, Apple shares had risen for three consecutive sessions prior to Friday and were approaching their all-time high of $345. Earlier this week, Citi reiterated its Buy rating on Apple ahead of the company's earnings, which are expected in early November.
Investors are also looking ahead to Apple's plans to expand its presence in the smart home market. The company is set to unveil a new range of devices at an event in New York City next week. This expansion is part of a broader effort to revive its HomeKit smart home platform and leverage its Siri AI assistant to strengthen its ecosystem.
The reported iPhone production cuts introduce a new uncertainty for investors ahead of Apple's upcoming earnings report. The reduction in component orders could prompt investors to reassess sales expectations and Apple's outlook for its premium smartphone business when the company reports its fiscal fourth-quarter results in November.
This article is for informational purposes only and does not constitute financial advice.
