Investors may want to avoid chip stocks at the moment.

All after Apple said it would scrap plans to increase production of its iPhones thanks to weaker than expected demand.  STMicro (STM), where Apple accounted for 20% of the company’s 2021 revenue, was down about 6% in pre-market.  Taiwan Semiconductor (TSM) was also down about 3.5% on the news.

“Apple has told suppliers to pull back from efforts to boost production of the iPhone models by as many as six million units in the second half of the year, Bloomberg reported, citing people familiar with the matter. Apple will instead aim to make 90 million iPhone 14s by the end of year, roughly the same as iPhone 13 production last year,” as noted by MarketWatch.

Unfortunately, demand may remain soft for the foreseeable future.

“Weaker consumer demand is to be expected when utility bills are going up, interest rates are going up, mortgage costs are going higher … discretionary spending is going to be curtailed by that,” said Patrick Armstrong, chief investment officer at Plurimi Wealth in London, as quoted by Reuters.  “Apple is not immune to that and it’s probably symptomatic of what’s happening across many different companies right now.”