Sources in the supply chain told Nikkei Asia that Apple had slashed AirPods production by 25% to 30% this year as competition dents sales of the tech giant's fastest-growing product line.
Apple originally planned to make 110 million AirPods this year but has slashed production to between 75 and 85 million units. The downward revision indicates that demand is weakening after several years of double-digit growth.
"The most significant order reduction is for the second quarter toward the start of the third quarter," said one of the sources. "The levels of inventory [in warehouses] and in-store stocks of AirPods are currently high ... and demand is not as strong as expected."
The retail price of AirPods Pro on Amazon is $197, a 20% discount compared with its original price of $249.
Nikkei Asia did not break down any differences across AirPods, AirPods Pro, or AirPods Max - though judging by price discounts on Amazon, the price reduction of AirPods and AirPods Pro are likely due to slumping sales and rising inventory that forced Apple to cut production.
"The levels of inventory [in warehouses] and in-store stocks of AirPods are currently high... and demand is not as strong as expected," another source told the publication. "The most significant order reduction is for the second quarter toward the start of the third quarter."
The Airpod craze, which started in late 2016, appears to be fizzling.
"It is not possible to grow 30%, 40%, 50% by shipments every year for a long time. ... At some point the growth will slow down and normalize," said an executive-level source. "The time of high growth for AirPods might be past."
According to wireless headphone data from Counterpoint, intense competition is quickly eroding Apple's market share, from 60% in 2018 and 47% in 2019 to 31% last year.
Counterpoint said the 2021 outlook for wireless headphones sales is expected to dramatically slow down from last year's 80% surge due mostly to demand-pull forwarded by the virus pandemic forcing people to work at home and upgrade electronic devices.
The AirPods boom appears to be faltering in 2021 as CEO Tim Cook gears up to jolt consumers with the debut of AirPods 3 sometime in the third quarter. If there's no significant redesign or new feature - then perhaps consumers will be less reluctant to upgrade to the newest model.