Apple, led by boss Tim Cook, is understood to be curbing the number of iPhones it aims to produce for the rest of the year, knocking its shares.
(Picture: Getty Images)Shares in Apple dropped around 4% in in early trading the US, wiping nearly $100 billion off its value, as investors reacted to news that it had cut back the number of iPhone 14s it planned to make.
The Cupertino-based firm saw its share price drop by 4.05 per cent as reported plans that it had sought to decrease production of its flagship product by 6 million units in the second half of the year appeared to unsettle investors.
The reduction still means the firm will aim to produce 90 million handsets for the period, nearly in line with the a year ago and in line with the company’s original forecast earlier this year.
While fewer iPhone 14 units could be produced this year, demand for more premium versions – the iPhone 14 Pro and iPhone 14 Pro Max - is understood to be stronger than the entry level version, potentially meaning that any dents to profitability could be cushioned.
Moves to cut production, originally reported by Bloomberg, come after the firm recently announced it would be moving some of its production to India and away from China.
Apple’s shares fell as much as 4 per cent in premarket trading to hit $145.89, which would have been a two-month low and equivalent to a $97.6 billion drop in value, but recovered to around a 2.6 per cent fall or $63.4 billion later in the premarket session.
The lurch downwards also weighed on growth-focused peers such as Microsoft, Google-parent Alphabet and Tesla, all falling between 1.5 per cent to 3 per cent in premarket trading.
Once markets opened, Microsoft and Alphabet were broadly flat, but Tesla dropped roughly 1.5 per cent to $278.7 a share.
With inflation hitting multi-decade highs for consumers across the world, companies that rely on discretionary spending power could face challenges in the coming months and years.
Inflation hit 8.3 per cent in August in the US, while in the UK, the Consumer Prices index measure of inflation hit 9.9 per cent in the 12 months to August.
Both nations’ central banks have been raising interest rates to counter the pace of inflation, but experts suggest it is too early to tell if the hikes are having any effect.
Furthermore in the UK, the pound’s recent fall against the dollar and euro means that British consumers are essentially paying even more for imported goods and for commodities prices in dollars, such as oil.
