Consumer demand for the latest iPhones appears to be falling short of Apple Inc.’s expectations.

The Wall Street Journal reported today the company has scaled back production of the latest-generation XS, XS Max and XR models that it unveiled only in September. Apple suppliers involved in manufacturing the XR, most affordable of the trio, are said to be hit particularly hard.

Sources told the Journal that the iPhone maker had originally planned to produce about 70 million units of the model between September and February, but cut the number by a third. The company reportedly went on to slash XR manufacturing rates a second time last week.

The tipsters didn’t share production numbers for the other two iPhones. But they shed some light on the apparent frustration among Apple’s suppliers, with one source being quoted as saying that “growth fixes a lot of sins. When it slows, rocks start to show up in the bottom of the ocean.” The slowing demand blamed for the production cuts was reportedly exacerbated by Apple’s decision to launch three different iPhones this year instead of the usual two.

Apple’s stock dropped nearly 4 percent this morning on the report, pulling the Dow Jones Industrial Average down more than 1.7 percent and the tech-heavy Nasdaq down 2.8 percent.

Just a week ago, the market fell even more after three iPhone suppliers issued warnings of weakening demand. Apple shares fell 5 percent that day, taking down the shares of other suppliers such as Cirrus Logic Inc. and Broadcom Inc.

This latest revelation lines up with the other information that has emerged about the iPhone supply chain recently. Earlier this month, Japanese business publication Nikkei reported that Apple had instructed Foxconn Technology Group and other key manufacturing partners to halt planned expansions of their production lines. Other suppliers have lowered their revenue forecasts without explicitly naming iPhone demand as the reason.

But it’s Apple’s own financial figures that are raising the most eyebrows on Wall Street. In its most recent earnings call, the company reported fewer iPhone shipments than analysts had expected and announced that it will stop breaking out unit sales going forward. Apple’s revenue forecast for the current quarter missed expectations as well.

These recent developments have prompted several analysts to downgrade Apple Inc.’s stock or lower their 12-month price targets. Yet even amid the stagnating growth, the company’s bottom line is as strong as ever.

Even though it sold fewer handsets than expected during the three months ended Sept. 29, Apple’s revenue jumped 20 percent to $62.9 billion. The increase was fueled in part by the strong performance of the iPhone maker’s services segment. The business, which among other includes the App Store and Apple Care, hit the $10 billion quarterly revenue mark for the first time.

Photo: Apple