According to the new proposal, overall production for new and old iPhones would be reduced from 43 million units to 40 million for the March quarter.
Nikkei cited the decline in the production to a more competitive market and the ongoing US-China trade war.
Apple decided a year ago to halt reporting on sales numbers of its iPhone and other hardware units, causing concern for investors who feared there may be a slowdown in demand for premium Apple products.
Apple suppliers have also confirmed that they expect dropping sales in 2019. On a related note, research firm Counterpoint says that although iPhone XR could be the company's best-selling handset till date, it has not yet matched up to the sales performance of the iPhone X that came out in 2017.
Rumor has it that Apple is scaling back its production plans for its most recent fleet of handsets - the iPhone XS, iPhone XS Max, and iPhone XR - by around 10%.
Cook blamed the significant fall in smartphone sales in China for the iPhone's struggle, as well as things like "foreign exchange headwinds". Summit Trail Advisors LLC raised its stake in Apple by 17,669.4% during the 1st quarter. This latest request was allegedly made before Apple issued a warning on its revenues on 2 January, in which it said revenue for the final three months of 2018 would be around $84bn (£66.8bn).
Tesla Drops Cheapest Versions of Model S, Model X
Tesla's move to break ground on the factory comes amid the backdrop of an ongoing trade war between Washington and Beijing. Getting a Chinese "green card" (sample above) has been described as "one of the most hard tasks in the world".
The report comes after chip suppliers Samsung Electronics and Skyworks Solutions flagged weak first-quarter chip demand for smartphones.
As Chinese demand has faltered, Apple has increased focus on India, which recently overtook the United States as the world's second-largest smartphone market.
Apple's Chief Executive Officer Tim Cook told CNBC on Tuesday that "naysayers on Wall Street were under-appreciating the Company's growing ecosystem of devices and services".
Slowing iPhone sales aren't just bad news for Apple.