Nikkei: Apple Told Suppliers to Cancel Plans for Additional iPhone XR Production Lines

Apple has told iPhone assemblers to halt plans for additional production lines dedicated to the iPhone XR, claimed a new report on Monday.

According to sources cited by the Nikkei Asian Review, Apple has informed Taiwanese smartphone manufacturers Foxconn and Pegatron of the cancelation, which the report said signaled "disappointing demand" for Apple's lower cost flagship model, which launched late last month.

"For the Foxconn side, it first prepared nearly 60 assembly lines for Apple's XR model, but recently uses only around 45 production lines as its top customer said it does not need to manufacture that many by now," a source familiar with the situation said.

That means Foxconn, the Taiwanese company traded as Hon Hai Precision Industry, would produce around 100,000 fewer units daily to reflect the new demand outlook -- down 20% to 25% from the original optimistic outlook, this person said.

As for Pegatron, the iPhone assembler is said to be "suspending plans to ramp up production and awaiting further instructions from Apple," according to Nikkei's supply chain sources.

Apple has reportedly also asked smaller iPhone assembler Wistron to stand by for rush orders, but Nikkei's sources said the company will receive no orders for the iPhone XR this holiday season.

Nikkei's reporting on iPhone supplies has been off the mark in recent years, with claims of Apple slashing iPhone production orders on weak demand being at odds with later sales figures.

The latest report also clashes with recent remarks made by noted Apple analyst Ming-Chi Kuo, who said that iPhone XR pre-order demand in the first three days of the device's availability was "better than that" of the iPhone 8 and iPhone 8 Plus during the same period last year.

Kuo said that although pre-order demand immediately after launch has been lower for the iPhone XR versus the flagship iPhone XS models, overall iPhone XR shipment momentum is "more stable" because it will drive more customers to upgrade than the iPhone 8 series over time.

On the flip side, some analysts expressed concerns that the iPhone XR's strong availability following launch implied weak sales of the $749 handset.

In addition, Apple's $89 to $93 billion revenue forecast for the first fiscal quarter of 2019 was cautious in its earnings call, but Apple blamed this on foreign exchange costs, issues with supply/demand balance, and weakness in emerging markets.

Apple CFO Maestri also explained that Apple had "some uncertainty" around supply/demand balance for the "unprecedented number" of new products the company had launched over the last six weeks.

The launch timing of the new iPhones was also said to be a factor, with the iPhone XR coming later than the XS and the XS Max. This had an effect on Apple's Q4 revenue and is also expected to impact Q1.

Related Roundup: iPhone XR

Tag: nikkei.com

Top Rated Comments

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Gooberton

13 months ago

I’m not shocked at all. Apples greed is out of control.

Rating: 65 Votes

Skeith

13 months ago

Hope this is a good indicator to Apple. Your phones are too expensive.
Just chill a bit with the prices will ya?

Rating: 59 Votes

Tiger8

13 months ago

With Apple no longer reporting iPhone sales numbers, it’s a free-for-all when it comes to Apple rumours now.

The very fact that they stopped reporting numbers should tell us that, they are no longer that good.

No publicly traded company hides news that would spike their shares

Rating: 46 Votes

rmoliv

13 months ago

For the price of a XR people can buy OLED, dual or triple camera phones from other brands such as Samsung and Huawei. The only reason I'd buy it if I couldn't afford the Xs Max would be access to iOS.

Rating: 31 Votes

levitynyc

13 months ago

I took a look at one of those in Best Buy yesterday as I’m looking to replace my 7Plus.

Meh. Maybe it was half the price I’d consider it.

Just felt and looked cheap.

For someone like my dad, he wouldn’t notice the resolution drop, but he would completely balk at the price.

That should be a $499 phone.

Rating: 27 Votes

Abazigal

13 months ago

With Apple no longer reporting iPhone sales numbers, it’s a free-for-all when it comes to Apple rumours now.

Rating: 19 Votes

Joniz

13 months ago

The problem I’m having with Apple these days when it comes to their phones and their iPads and even their computers is that there’s too many models that overlap in price/performance/value. In the case of the iPhone, there’s the XS, XS Max, XR, 8, 8 Plus, 7, 7 Plus. Looking to replace a 6, but when I spend time trying to figure out what’s the best model to get where I feel like I’m not stuck with old tech but also not getting ripped off in the I pay for it, I get weary and think Well, my 6 is still doing fine enough. I’ll look at this later. I’ve had the exact same problem with trying to select a new iPad and a replacement laptop.

There’s a balance between too many products and too few and Apple is clearly on the Too many side.

Reminds me of the days of Sculley and Spindler. I was there back then and it was the same damned game.

Also, I don’t believe the massive price increases (nothing gradual about it when the Mac Mini shoots up more than 50%) is all due to the device itself. You have to remember that Apple’s going to use the devices that make money to pay for the things that do not, like the Homepod, Apple Car, Apple exclusive TV programming, and the twenty other projects they seem to have wandered off to take on. All of those people in all those other projects have to be paid as well, and have health insurance (because the U.S. still ties health insurance to where you work for some damned reason) and the support staff and the people who empty the trash cans or serve in the cafeteria.

Anyone who was around for those grand days back when knows this will not end well until there’s a dramatic change in the culture.

Maybe they can use their amazing technology to bring Steve back again, as a hologram. It just needs to shout at folks to get their asses in gear and stand on stage and show more real emotion than the humans they have now. They have that emoji face thing.

Rating: 16 Votes

OllyW

13 months ago

Time for a small round-up:

STEVE JOBS ERA

iPhone > phenomenal success
iPhone 3G > phenomenal success
iPhone 4 > phenomenal success
iPhone 5 > phenomenal success

BOZO ERA

iPhone 6 > failed design, still semi-successful
iPhone 6s > failed design, for phablet niche market still semi-successful
iPhone SE > phenomenal success
iPhone 7 > failed design without innovation
iPhone 7s > failed design without innovation
iPhone SE refresh > phenomenal success
iPhone 8 > failed design without innovation
iPhone 8s > failed design without innovation
iPhone X > failed design, horrific costs, still semi-successful
iPhone X plus > failed design, horrific costs, for phablet niche market still semi-successful
iPhone Xs > failed design without innovation
iPhone Xs max > failed design without innovation

iPhone XR > failed design, wrong niche phablet market, horrific price

Apple did it all wrong. Tim Cook did it all wrong. Jony Ive did it all wrong.

Jobs early recipe for developing the iPhone was slight enlargement of the display with each version and improving overall design. Cook and Ive did improve nothing. they blatantly blew up the screen size in hope for more cash from the App store. There are people, who want giant phablets, there are even ones, who would love using an iPad pro to make calls.

But the vaaaaaast majority, especially men who don't carry men purses, want a SMALL phone in their front pockets. Easy as that. And screw Your App Store sales, Tim. I am not buying anything until You give me that small phone.

This would have never happened if Apple would not have changed from "Apple Computers Inc" to "Apple soldered computer parts Inc"...

Steve Jobs driving force was not greed but user experience and the sheer beauty of a product.

Steve would have never allowed this.

Four of those iPhones models don't even exist!

Rating: 15 Votes

phillytim

13 months ago

The problem is that there are still enough iPhone x stock around . In Europe they are going for 50 euro’ s more than the XR, and they have Dual camera’s and na OLED , and they look exactly the same as the xs.
And general consumers don’ t know that much about smart hdr or the a12 vs the a11. It looks the same as the xs, and better than the xr, so that is what they want.

Perhaps apple should have kept the x in their line-up for about $849 and the xr for $699 instead of $749, stop iPhone 8 and 8 plus, and keep the 7 and 7 plus around for the budget minded.

This quote here is precisely what gets Apple into trouble, just as back in the Sculley days of product confusion.

Apple should simply release a single brand new iPhone each year (yet still in both regular and Plus sizes), price them reasonably, and simply leave all previous iPhone models to each of the used and the refurbished markets. Simple. Period.

Rating: 12 Votes

allenvanhellen

13 months ago

Make an iPhone XR mini and iPhone XS mini. Profit.

Rating: 9 Votes

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