Nikkei: Apple Will Continue Reduced Production Of iPhones

Shares of Apple Inc. AAPL and its suppliers are in the red after a Nikkei report said Apple is extending the iPhone production cut for another quarter.

Cuptertino, California-based Apple "will continue its reduced production of iPhones in the April-June period in light of sluggish sales," Nikkei said.

Nikkei reported that Apple cut production for the January-March quarter by approximately 30 percent from the year-earlier period. "With sales still sluggish, the U.S. company has told parts suppliers in Japan and elsewhere that it will maintain the reduced output level in the current quarter," the report said.

The report from Nikkei is in sync with Pacific Crest's Michael McConnell who cut the estimates for iPhone suppliers to reflect weaker-than-expected demand trends for the iPhone 6s in Asia.

Related Link: Apple Demand "Cold As Ice" In Asia, iPhone Suppliers Face Risk Of Earnings Misses

Apple, Parts Suppliers Dip

On the news, Apple fell 1.85 percent to $110.03. Shares of following Apple suppliers have also declined on the report.

• Skyworks Solutions Inc SWKS dropped 1.86 to $75.34
• Broadcom Ltd AVGO slipped 1.89 percent to $155.82
• Jabil Circuit, Inc. JBL edged down 0.83 percent to $17.85
• Qorvo Inc QRVO dropped 3.357 percent to $47.86

Global Smartphone Market

Meanwhile, an IDC report said, "Worldwide smartphone market will reach a total of 1.5 billion units shipped in 2016, up 5.7 percent from the 1.4 billion units shipped in 2015." However, the growth is slowing.

"As smartphone penetration continues to escalate in many regions across the globe, 2015 likely represents the last year of double-digit (10.4 percent over 2014) smartphone growth that we will see," Anthony Scarsella, research manager for IDC's Mobile Phones team, said in a statement.

Scarsella further noted that emerging markets such as Indonesia, India, Africa and the Middle East offer great opportunity for smartphone vendors, while mature markets such as the United States, China and Western Europe will have to depend on selling frequent upgrades to existing customers to maintain market share.

"New trade-in plans and leasing options set in place by both carriers and vendors such as Apple are the first vital step to ensure stability and continued growth," Scarsella added.