How Apple Plans To Keep iPhone Demand Up In Tough Market

Consumer electronics companies are staring at tougher times ahead, with analysts warning of disappearance of demand and not mere deferral.

Apple, Inc. AAPL is reportedly preparing for flat iPhone production for 2022.

What Happened: Apple has asked its suppliers to assemble about 220 million iPhones for 2022, the same as in the previous year, Bloomberg reported, citing people familiar with the projections. Consensus estimates are for 240 million units, the report said.

The Ukraine-Russia war that worsened supply challenges further has tempered expectations for smartphones, with most market research firms lowering full-year production and shipment forecasts, the report said.

Global smartphone shipments fell 11% year-over-year in the first quarter of 2022, data from Canalys showed. The weakness was predicated on unfavorable macroeconomic conditions and sluggish seasonal demand.

Related Link: Apple's Latest iPhone Ad Beefs Up Its Privacy Savior Image...Yet Again

Apple Relatively Better Positioned: Even as the demand and supply picture isn't inspiring, Apple can stay afloat, the Bloomberg report suggested.

Cupertino is reportedly planning to leverage its position as a vendor of pricier high-end phones. The company's clientele includes mostly price insensitive wealthier people, who will likely continue buying. Apple reportedly expects the strength of its software and service ecosystem to fuel hardware sales.

Additionally, following Huawei's exit from the smartphone business, Apple now has one less competitor to contend with.

Apple is planning for major upgrades in its iPhone 14 iteration, which will likely serve as major pulling point, the report said. The previous iPhone 13 models incorporated only cosmetic changes. The new low-end iPhone SE variant released in April could bring in more budget-conscious customers into its fold, it added.

AAPL Price Action: In premarket trading, Apple shares were down 1.42% to $138.53, according to Benzinga Pro data.