Apple shares sank in trading Friday after a report said the tech giant expects to ship 20% fewer new model iPhones this year than it previously projected.
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The Cupertino, California, company told parts suppliers to produce 20% fewer components for versions of its iPhone X and iPhone 8, Japanese financial outlet Nikkei reported, citing sources familiar with the matter. Under the revised estimates, Apple expects to ship 80 million new iPhone units.
“This news needs to be viewed in the context of Apple probably being overly optimistic last year in relation to the prospects for its new phones, leaving it with excess inventory in the first part of this year,” Atlantic Equities analyst James Cordwell said, according to Reuters. “At least part of this lower order forecast probably relates to Apple just being a little more realistic.”
Apple shares fell as much as 2% in trading Friday and closed down about 1%. The stocks of several iPhone parts suppliers in the U.S. and abroad were also down.
Apple did not immediately respond to a request for comment on Nikkei’s report.
The iPhone has long served as Apple’s biggest revenue driver. The flagship smartphone was responsible for more than 60% of the company’s sales in fiscal 2017.
However, some Wall Street analysts have argued that the higher price point of the iPhone X, the base model of which sells for $999, was hurting demand.
Apple reported iPhone unit sales of 52.2 million in its most recent quarter, slightly below the Thomson Reuters consensus estimate of 52.3 million.