Apple losing its 'edge' as iPhone sales nosedive

Less than six months after Apple Inc debuted its latest series of iPhones, the United States company is cutting production because of lackluster sales.

Analysts said iPhone shipments in China, Apple's biggest market, are set to fall in the coming months.

James Yan, a Beijing-based smartphone analyst with IDC China, said shipments for January will face "a significant slump" in the country compared with a year ago, when the iPhone 6 and 6 Plus were the flagship devices.

"The first quarter shipments will be greatly lower than a year ago as well," Yan said, adding buyers are already looking to the next-generation device.

Yan's comments came after a Nikkei report said that Apple is reducing output of the iPhone 6S and 6S Plus models by about 30 per cent in the first quarter compared with its original plans. Though retailers will get a chance to clear out pending inventories, suppliers may see steep cuts in orders.

Stocks of Apple and its major suppliers, such as Sharp Corp and Pegatron Corp fell on Wednesday while Chinese mainland suppliers stayed afloat as the country's stock market advanced.

Apple did not comment on the matter.

Nicole Peng, director of Canalys China based in Shanghai, said the scale back will have a limited impact on Chinese suppliers as many of them have tied up with local smartphone companies.

"The production cut will hurt the confidence of the channel and supply chain ... But (many Chinese suppliers) are already partners with firms such as Huawei Technologies Co Ltd and vivo Mobile Communication Technology Co Ltd which are focusing on high-end products," Peng said.

"2016 will be a challenging year (for Apple)," she said.

Apple was the biggest smartphone vendor in China during the first quarter of last year, shipping 14.5 million devices thanks to the strong adoption rate of the iPhone 6 series that were compatible with the newly launched fourth-generation telecom technology. Its market share was quickly eroded by Huawei and Xiaomi Corp as the Chinese firms released cheaper, but good-quality handsets.

Weaker-than-expected iPhone 6S and 6S Plus sales saw Apple jostling with smaller local vendors such as vivo and OPPO in the third-quarter of 2015 while Xiaomi and Huawei clinched the top two spots, according to IHS Technology, another research firm.

The US company is opening bricks-and-mortar stores in smaller Chinese cities and announced plans to introduce mobile payment service Apple Pay to China in a bid to lift its presence in the market.

But rapid advance of local players in the above 3,000 yuan ($457) segment pulled down Apple's market share.

According to data from China Academy of Telecommunications Research, overseas smartphones accounted for just 17 per cent of the total handset shipments in China during November. Apple and Samsung Electronics Co Ltd were the only big foreign firms in the list.

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