The unusual downgrading of forecasts showed the weakening demand for iPhones in China, the largest mobile market in the world, where there was also a slowdown in the economy due to the commercial war between the Asian country and the United States.
Many analysts and consumers say the new iPhones are overpriced.
Apple asked its suppliers late last month to produce fewer than expected units of its Models XS, XS Max and XR, Nikkei reported, citing sources with knowledge of the situation.
The request was sent before Apple announced its demotion, Nikkei said. The worst sales outlook, which Apple attributed to weak Chinese demand, caused a sharp sell-off in global stock markets.
Market analysis firm Canalys estimates shipments fell 12 percent in China last year and expects another 3 percent to fall in 2019, dropping below 400 million for the first time since 2014.
The expected production volume for new and old iPhones is likely to be reduced to between 40 and 43 million units for January-March, compared with an earlier forecast of between 47 and 48 million units, the Nikkei said, citing a source familiar with the situation.
Apple did not immediately respond to a request for Reuters comments.