Electronics supply chain cuts foreseen with Russia’s continued attacks on Ukraine

Uncertainty over the war in Ukraine and inflation are expected to hurt demand for consumer electronics.

One emerging indicator comes from Apple, which is lowering orders to multiple suppliers amid reported plans to cut iPhone and AirPod output, according to a report on Monday in Nikkei Asia.

The publication said Apple plans to lower production orders for the iPhone SE, a 5G-ready budget phone, by about 20% for next quarter than ordinally planned. That would be a reduction of about 2 million to 3 million fewer units for the quarter. The publication said it spoke to four people with knowledge of the situation who cited weaker demand for the lowered production orders.

Also, Apple is expected to reduce orders for AirPods by more than 10 million devices for all of 2022 on soft demand, after shipping 76.8 million AirPods in 2021, according to Counterpoint Research.

Apple has also reportedly asked suppliers to make 2 million fewer units of the entire iPhone 13 range than previously planned.

Apple did not respond to a request to comment on the report. Apple halted its production sales in Russia after the Ukraine war started.  It is the third biggest smartphone provider in Russia with about 16 million iPhones shipped there last year, or about 16%, according to IDC rankings.

In early March, IDC reported that the Russian invasion of Ukraine and the resulting diplomatic and economic response had forced more than half of CIOs in a survey to reassess their tech spending plans in 2022 with 10% expecting strong reductions. Also, IDC said that while it expects a “steep decline and slow recovery for ICT spending in Russia and Ukraine, the global impact of this decline will be somewhat limited.”

While the two countries only account for 5% of all ICT spending in Europe and 1% globally, IDC said the crisis’s likely impact on trade, supply chains, capital flows and energy prices will affect the global economy “on a broader scale with negative consequences for both the regional and and worldwide ICT market.”  

The International Monetary Fund is expected to lower its global economic growth forecast in April due to the war and declines expected in many countries. It had last estimated a 4.4% economic growth global this year.

Nikkei Asia based its report on interviews with four sources who were unnamed but identified one as an executive at an Apple supplier.  That source noted the longtail of economic impacts on the consumer electronics demand chain. “The war has affected spending at the European markets,” that source told Nikkei Asia. “It is understandable [consumers will] save the money for food and for heating.”

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