Not even the iPhone is immune

Hi all, this is Vlad in Tokyo. The big news overnight was word of Apple’s revised production plans in the wake of uninspiring early iPhone 1 [View in browser]( [Bloomberg]( Hi all, this is Vlad in Tokyo. The big news overnight was word of Apple’s revised production plans in the wake of uninspiring early iPhone 14 sales. But first... Today’s must-reads: - Meta [blocked inauthentic pages]( from Russia focused on Ukraine - Apple News sent out [racist alerts]( to users after Fast Company was hacked - South Korea is seeking to [freeze assets tied]( to crypto fugitive Do Kwon China leads the way In the weeks leading up to the iPhone 14 series launch, budding hope of a sales spurt prompted Apple Inc. to prep suppliers for an additional 7% boost to production this year. Those plans for the new devices have now [been iced](. The reasons are no mystery. Europe is expected to plummet into recession, the UK’s experimental trickle-down economics are spooking markets, inflation has emerged even in Japan and US interest rates are skyrocketing. But China best showcases how quickly an economic slowdown can hit even the seemingly invincible iPhone. New iPhone sales over the first three days of availability in China were [down 11%]( on last year, a Jefferies note said. China is the world’s biggest smartphone market that every year accounts for a fifth or more of Apple’s revenues. My Beijing colleague Gao Yuan says this launch has triggered less scalper activity — which in prior times was evident even in Tokyo, where I’d see lines filled with Chinese people eager to corral as many of the newest handsets as possible. Today? Not so much. Apple shares fell as much as 4% in pre-market trading. Major Apple suppliers from Taiwan Semiconductor Manufacturing Co. to Hon Hai Precision Industry Co. took a hit on the iPhone production news. Even contracts on the Nasdaq 100 were down. Of course, the iPhone being the iPhone, we’re not talking catastrophe here. Apple’s still planning to build 90 million new handsets this year, in line with last year, and indications are that it’s selling more of the Pro units than the lower-priced editions. A higher average selling price for the same number of devices sold would produce another sunny picture at the next earnings announcement. But there are a couple of reasons for concern. First, Apple is famously judicious and precise with its product planning. To see it veer so quickly from increasing production to throttling back down — in the space of a few weeks, according to people in its supply chain — is uncharacteristic. Then there’s the whole dollar situation: Apple sells a lot of iPhones overseas but counts its profits in American currency. There’ll be some pain when it converts profits from the weakened major currencies. The global economy’s been upended by Russia’s invasion of Ukraine and China’s drastic Covid-19 lockdowns this year. I don’t know how important the crypto industry’s $2 trillion meltdown has been, but it sure hasn’t helped. And now that we’re living in a world of novel exchange rates, even Apple’s struggling to gauge consumer sentiment. The hype and enthusiasm for the latest flagship devices now peter out with unprecedented quickness. Samsung Electronics Co. launched [new foldables]( this summer, and they were old news within a couple of days. The iPhone 14 series is most interesting for its redesigned notifications and [camera notch](, and it too hasn’t kept the geeks excited long. Unpredictability was the recurring theme that device makers recited during the pandemic. It looks like that will continue for a while yet, albeit for a more diverse set of reasons.—[Vlad Savov](mailto:vsavov5@bloomberg.net) The big story The economic damage from the shutdown of Russian gas flows is piling up fast in Europe and risks eventually eclipsing the impact of the global financial crisis. With a continent-wide recession [now seemingly inevitable](, a harsh winter is coming for chemical producers, steel plants and car manufacturers starved of essential raw materials who’ve joined households in sounding the alarm over rocketing energy bills. What else you need to know Intel is chasing [a comeback]( in the chip industry with new processors and software. China lacks [the right workers]( to boost Beijing’s favored industries. Tesla has emerged as an [unlikely megacap rival]( to Apple. A new group is targeting software makers’ [restrictive license rules](. 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