Apple's Decision to Slash iPhone X Production Volume in Q1 2018 Could Delay Future OLED Models

Apple is set to halve its 40 million iPhone X production target in the three month period from January, reported Nikkei Asian Review on Monday without naming a source.

The U.S. tech giant notified suppliers that it had decided to cut the target for the period to around 20 million units, in light of slower-than-expected sales in the year-end holiday shopping season in key markets such as Europe, the U.S. and China.

The iPhone X, Apple's first smartphone equipped with an organic light-emitting diode display, has failed to catch on globally -- something many put down to a price tag starting at $999.

Part of the reason for the high price tag of iPhone X is said to be down to the cost of OLED panels made by Samsung, which is the only supplier of the component that can guarantee Apple a steady supply of the screens. According to Nikkei, Apple is now considering an increase to the proportion of LCD iPhone models by reducing production of the OLED screen models scheduled for release this year.

Apple is expected to launch a trio of new iPhone models in 2018, including 5.8-inch and 6.5-inch models with OLED displays and a 6.1-inch model with an LCD display, according to respected KGI Securities analyst Ming-Chi Kuo. However, at least one other analyst has predicted that the LCD-to-OLED ratio this year will actually be 2:1.

DigiTimes' Luke Lin believes Apple is increasingly leaning towards releasing two LCD-based models and a single larger 6.4- to 6.5-inch OLED model. Indeed, today's Nikkei report claims lackluster sales for iPhone X could actually result in a delay to the company's plans to introduce OLED screens in other models, potentially adding weight to DigiTimes' prediction.

The production cuts for the X will have a domino effect on manufacturers that have supplied high-performance components for the handset, with the combined impact expected to run into billions of dollars. It could also slow down the shift at display manufacturers from LCD to OLED technology.

Nikkei added that Apple is expected to maintain a total production target of 30 million units for lower priced models such as the iPhone 8, iPhone 8 Plus and iPhone 7. Apple Japan replied to Nikkei's request for comment by stating that it would confirm the details with headquarters.