What happened
Shares of Apple (AAPL 1.27%) were tumbling today after a Bloomberg report said that the company is walking back plans to boost iPhone production.
This news worried Apple shareholders, sending the tech stock down by 2.9% as of 12:14 p.m. ET.
So what
Apple had originally told its suppliers to prepare for increased production as it anticipated higher demand for its latest iPhone 14 models. But some of that demand for Apple's entry-level iPhone 14 models never materialized, according to sources speaking to Bloomberg.
Image source: Apple.
Now, Apple is expected to cut back on its production by about 6 million phones. That would put the company's production of its latest models at about 90 million units in the second half of this year, which is about the same number of new iPhones it produced over the same period last year.
The pullback in iPhone production is apparently the result of higher-than-expected demand for the iPhone 14 Pro/Max models and lower-than-expected demand for Apple's entry-level iPhone 14 models.
Now what
While Apple investors are reacting strongly to this news today, they should also keep in mind that in early August, a separate Bloomberg article said that Apple was asking its suppliers to produce 90 million units of its new models. So while the company was recently anticipating a surge of demand that didn't happen, it doesn't change what the company had originally expected a little more than a month ago.
Apple shareholders may be extra cautious about this news as the Federal Reserve continues to hike interest rates at an aggressive pace and investors worry that the Fed's move could end up tipping the economy into a recession.
But long-term investors should keep in mind that a temporary pullback in iPhone production isn't a good reason to dump Apple's stock.
