The two top phone manufacturers in the world, Samsung and Apple are cutting their phone production for this year as demands decrease due to high inflation and the ongoing Russia-Ukraine war.
While Apple cuts production at low to mid-range prices, Samsung Electronics is said to have cut production not only for mid- to low-end models but also for flagship (high-priced mobile phone) models, a Korean publication reports.
Apple had earlier in March announced plans to reduce the production of iPhone SE (mid-low-end model) by 20% compared to its original plan. This is because the demand for mid-to-low prices is decreasing due to high prices, and the supply of parts is also being disrupted.
What they are saying
- The Korean report quoted an official from a Samsung Electronics partner company as saying: “Recently, Samsung Electronics received a call to reduce the order volume of smartphones from the current target of 310 million units to 280 million units.”
- Shinhan Financial Investment also analyzed that Samsung Electronics recently lowered its annual smartphone production forecast for 2022 by about 10% to 270 million units. After producing 300 million units in 2017, Samsung Electronics has stayed in the mid-to-late 200 million range, and set a goal of producing 300 million units this year ‘in five years’.
- Park Hyung-woo, a researcher at Shinhan Investment Corp., said, “As of May, a strong inventory adjustment is confirmed.” “Smartphone production in May is expected to decrease by 35% compared to the average in January-April.”
Samsung Electronics’ parts makers are also expected to take a hit. It is known that Samsung Electronics has recently revised the order to reduce the amount of supply by up to one month to the parts maker. Samsung Electronics announced to parts makers that it intends to restore the reduced order volume when a new foldable smartphone is released in the second half of this year.