Analyst predicts Apple will cut iPhone production yet again, iPhone XR to take biggest hit

Rosenblatt analyst Jun Zhang is out today with a new investor note in which he predicts Apple could cut iPhone production by another 4 million units during the March quarter of 2019. Zhang’s prediction comes as Apple has reportedly already cut iPhone XS and iPhone XR production at least once.

In his investor note, Zhang says that Apple faces challenges in China, particularly relating to the arrest of Huawei CFO Meng Wanzhou. We first outlined this possibility last week, explaining that the arrest could put Apple at risk of retaliation. As noted by Seeking Alpha, Zhang says in his note that Chinese companies are already offering benefits to those who choose Huawei over Apple:

Analyst Jun Zhang notes that many Chinese companies showed support for Huawei by subsidizing employees who purchased devices from the company instead of iPhones.

Specifically, Zhang predicts that Apple will cut iPhone XR production by some 2.5 million units during the March quarter, while iPhone XS production could take a 1 million unit hit. The iPhone XS Max, meanwhile, could see production trimmed by 500,000 units.

The Wall Street Journal reported last month that Apple had reduced orders for both the iPhone XS and iPhone XR. That report suggested that the company struggled to predict demand for its three-tiered iPhone lineup. Numerous Apple suppliers have also slashed expectations due to order reductions.

In related news, Apple’s market capitalization dropped to $744 billion as of closing today. While the entire market also suffered today, AAPL’s market cap is now well below Microsoft’s, which sits at $779 billion.

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