Apple may have grossly miscalculated market demand for the 5.4-inch iPhone 12 mini, its most compact handset in the lineup, according to a new supply chain report.

Is the iPhone 12 mini a Dud?

Nikkei Asia claims Apple told its suppliers to lower production of the device by 70 percent or more for the first half of this year. Plus, Apple is ostensibly cutting orders for all iPhone 12 models by bour 20 percent vs. its plans in December 2020. Sources claim that the iPhone 12 mini made up 10 to 15 percent of Apple’s orders for all iPhone 12 models in December 2020.

"Some of the components and parts for the mini have been reallocated to the iPhone 12 Pro and iPhone 12 Pro Max," said a person with direct knowledge of the matter. The story follows a recent Reuters report claiming that sales of the iPhone 12 mini had made up just five percent of Apple’s smartphone sales in the first half of January.

From the Nikkei report:

Sources added that the downward revision also reflects a correction of Apple's previous aggressive booking of components and parts at a time when makers of smartphones, PCs, servers, automobiles and more were gearing up to fight for limited supplies of chips, print circuit boards, displays, and other resources.

A recent research note from investment bank JP Morgan speculated Apple might stop producing the iPhone 12 mini as soon as the second calendar quarter of this year. That would be a first---Apple has never pulled a model after less than 12 months on the market.

Overall Output Is Still Up vs. 2020

Despite the cuts, Apple's iPhone manufacturing output should be up overall vs. last year.

According to Nikkei's sources, Apple in 2020 ordered 96 million handsets for the first six months of 2021---and that reportedly includes the entire iPhone 12 series, plus the previous iPhone 11 models as well as and the new iPhone SE.

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But now, Apple is targeting the production of around 75 million handsets. All told, Apple plans to ship about 230 million iPhones for 2021, an 11 percent annual increase.

Surprise, iPhone Sales Are Seasonal

Nikkei in the past wrote about similar iPhone production cuts that followed the profitable Christmas quarter, often in the context of portraying Apple as a company that is losing its steam. In reality, iPhone sales have always been seasonal. New models typically go on sale in September and reach their sales peak during the lucrative holiday shopping season.

After that, iPhone sales typically tend to decline steadily during the spring and the summer because most of the early adopters have already purchased the latest Apple shiny by then. On top of that, many other would-be shoppers employ the waiting tactics during that period because they know that the next model is coming out in a few short months.

That said, it's no secret the iPhone 12 mini hasn't been selling well (when was the last time you saw someone using it?) There's nothing wrong with it, except maybe the asking price: the phone starts at $729 for the baseline 5G model with a paltry 64 gigabytes of storage.

But Apple's biggest problem with the iPhone 12 mini is the fact that smartphone demand has been trending towards smartphones with bigger screens for several years now.