Friday, 16 November, 2018

Apple already telling suppliers to cut down expectations for iPhone XR orders

Report: Apple cancels iPhone XR production boost Apple cancels iPhone Xr production boost
Olivia Ford | 08 November, 2018, 04:13

Apple has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which launched last month, the Nikkei reported on Monday.

The Cupertino, California-based company has blamed weakness in emerging markets and foreign exchange costs for a disappointing forecast for sales in the run-up to Christmas that are crucial to results for consumer electronics producers. Weakened demand for smartphones globally might not hurt Apple's revenue too much, but suppliers could feel the strain.

Foxconn initially built out 60 assembly lines for the iPhone XR, expecting extremely high demand for the unit. "The utilization for the XR production is not reaching its maximum capacity now", Nikkei's source stated. According to a research note from analyst Jun Zhang (originally brought to light by Philip Elmer-DeWitt's Apple 3.0), there may have been some quality control issues involving the iPhone XR's printed circuit boards that led to a reduction in production output.

It seems that Apple has realised that the demand of the newly launched iPhone XR is not up to the mark.

"We caution investors not to lose sight of the massive metamorphosis on the horizon at Apple being led by the services business", Ives wrote in a research report published Monday. Foxconn and Pegatron each said they would not comment on specific customers or products. "Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units", sources told Nikkei Asian Review.

Of course, given how new the iPhone XR is, along with the fact that Apple recently chose to withhold its quarterly iPhone sales figures, we may never actually know how well or how poorly an iPhone model is selling again.

Broadly speaking, the original report regarding a drop in iPhone production illustrates why Apple understandably wants to keep iPhone sales close to its chest. Given the disparity between what we saw being said about the iPhone X past year and its 12-month performance, some caution is clearly warranted.

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