To The Moon

• Company had hoped to see new devices trigger sales spurt
• iPhone 14 Pro models selling better than entry-level handsets

Apple Inc.is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, according to people familiar with the matter.

The Cupertino, California-based electronics maker has told suppliers to pull back from efforts to increase assembly of the iPhone 14 product family by as many as 6 million units in the second half of this year, said the people, asking not to be named as the plans are not public. Instead, the company will aim to produce 90 million handsets for the period, roughly the same level as the prior year andin linewith Apple’s original forecast this summer, the people said.

Demand for higher-priced iPhone 14 Pro models is stronger than for the entry-level versions, according to some of the people. In at least one case, an Apple supplier is shifting production capacity from lower-priced iPhones to premium models, they added.

US stock-index futures turned lower after the news, with contracts on the Nasdaq 100 falling as much as 1.3%. Key chipmakerTaiwan Semiconductor Manufacturing Co.fell as much as 1.8%, Apple’s biggest iPhone assemblerHon Hai Precision Industry Co.was down as much as 2.4% and specialized producersLargan Precision Co.andLG Innotek Co.both slumped by more than 7%.

Apple iPhone 14 and 14 Pro phones at an Apple store in Sydney, earlier in September.Photographer: Brent Lewin/Bloomberg

Apple had upgraded its sales projections in the weeks leading up to the iPhone 14 release and some of its suppliers had started making preparations for a 7% boost in orders.

An Apple spokesperson declined to comment.

China, the world’s biggest smartphone market, is in an economic slump that’s hit its domestic mobile device makers and also affected the iPhone’s sales. Purchases of the iPhone 14 series over its first three days of availability in China were11% downon its predecessor the previous year, according to a Jefferies note on Monday.

Global demand for personal electronics has also been suppressed by surging inflation, recession fears and disruption from the war in Ukraine. The smartphone market is expected to shrink by 6.5% this year to 1.27 billion units, according todatafrom market tracker IDC.

“The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market,” said Nabila Popal, research director at IDC. “High inventory in channels and low demand with no signs of immediate recovery has OEMs panicking and cutting their orders drastically for 2022.”