'Within expectations:' Apple will cut iPhone production to start 2017

Apple will trim production of iPhones by about 10 percent in the January-March quarter, Nikkei reported, citing calculations based on data from suppliers.

The company slashed output by 30 percent in the January-March quarter in 2016 due to accumulated inventory, Nikkei reported.

Apple sold fewer iPhones in its fiscal 2016 than it had in the previous year for the first time since the iPhone was introduced.

'Within expectations'

A source at a parts supplier told Nikkei that the cut was "within expectations," suggesting that Apple's suppliers have been preparing to reduce their dependency on Cupertino.

The production cuts are likely to Apple's 4.7-inch iPhone 7, not the larger, more expensive iPhone 7 Plus. Demand is stronger for that device, and Apple has had trouble filling demand because its two-lens camera is difficult to manufacture.

KGI Securities analyst Ming-Chi Kuo predicted a year-over-year production decline over the entire first half of 2017 in November.

"We forecast total shipment volume of iPhones will decline YoY in 1H17 due to weak demand in China, slow shipment volume of 4.7" iPhones in 1Q17, and the lack of a new iPhone SE in 2Q17," he wrote in a note distributed to clients in November.

The gloomy outlook for sales of Apple's iPhone 7 in 2017 is another reason why the company is widely expected to launch an impressive new iPhone model in September, with a higher-quality screen, wireless charging, and new design.

Apple's shares were down under 1% percent in midday trading.