Apple Reportedly Cuts iPhone XS and iPhone XR Production Orders Amid Lower-Than-Expected Demand

In recent weeks, Apple slashed production orders for its latest iPhone XS, iPhone XS Max, and iPhone XR models due to "lower-than-expected demand," among other reasons, according to unnamed sources cited by The Wall Street Journal.

The report claims the production cuts have hit the iPhone XR hardest, with Apple said to have slashed its production plan for the device by "up to a third of the approximately 70 million units" it had asked some suppliers to produce between September and February, amounting to a reduction of up to 23.3 million units or so.

And in the past week, the report claims Apple told several suppliers that it cut its production plan again for the iPhone XR, as it battles a mature smartphone market and increasing competition from Chinese vendors like Huawei.

The production cuts are said to have "reignited frustration" among iPhone suppliers and "raised worries about Apple's ability to forecast demand."

We've heard this narrative before. Last year, a flurry of reports variously referred to the iPhone X as a "failure," "disappointment," and "flop." Another report said the iPhone X "did not live up to the hype." Yet, the iPhone X went on to become not only the top-selling iPhone at Apple, but in the entire world.

Apple also reported record-breaking iPhone revenue of $61.5 billion in the iPhone X launch quarter, so the device was anything but a flop.

Apple CEO Tim Cook has dismissed these kind of reports in the past. During an earnings call in January 2013, he noted that the company's supply chain is very complex and that conclusions shouldn't be drawn from singular data points:
Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.
Apple's financial chief Luca Maestri has also cautioned about trying to determine iPhone demand based on potentially misleading supply chain reports.

It is possible, however, that Apple is increasingly struggling to forecast iPhone demand. Today's report claims that Apple was "excessively optimistic" about its initial production forecast for the iPhone X, which it proceeded to slash "by some 20 million units" for the first three months of 2018.

Unfortunately, iPhone sales will be less transparent going forward, as Apple announced that it will no longer disclose iPhone unit sales in its earnings reports starting with the first quarter of its 2019 fiscal year.

Justifying the move, Maestri said unit sales are "not particularly relevant for our company at this point," as they are "not necessarily representative of the underlying strength of our business." He added that Apple may provide qualitative commentary related to unit sales if the info is valuable to investors.

Apple will still disclose iPhone revenue on a quarterly basis, however, and any significant year-over-year decline in that amount would help indicate if iPhone XS, iPhone XS Max, and iPhone XR demand is truly lower than expected.

AAPL is down nearly 15 percent since Apple's earnings report on November 1.

Related Roundups: iPhone XS, iPhone XR

Top Rated Comments

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16 months ago
Need to cut the price, not the orders.
Rating: 251 Votes
16 months ago
keep robbing your customers and eventually it's going to come back to you.
Rating: 175 Votes
16 months ago
When will Apple’s Board of Directors realize that Tim Cook’s greed is a threat to this company in a long-term?
Rating: 146 Votes
16 months ago
Good. Time to bring prices down to a sane level.
Rating: 115 Votes
16 months ago
Apple also slashed iPhone SE production — to zero. :mad:

That's when they lost me as a phone customer.
Rating: 110 Votes
16 months ago
Their greedy push for bigger profit margins was bound to bite them in the ass. I won't be surprised one bit if the new iPad Pro sees sales fall off as well. They can't continue to raise prices with this much competition.
Rating: 97 Votes
16 months ago
Odd - vastly over-priced and fragile hardware not proving to be super popular .... who knew ?
Rating: 82 Votes
16 months ago
This is what happens when you increase the price without adding any meaningful new features. There's zero incentive to upgrade from the X to the Xs, realistically there's not a huge incentive to move from a 7/8 to a Xs if it means breaking a carrier contract; and if you don't view FaceID as a must-have (I certainly don't).

Yes phones were always going to become less groundbreaking year-over-year, but this increasing of the price without any justification whatsoever was always going to turn people off and away form upgrading every year.
Rating: 44 Votes
16 months ago
Has there ever been an iPhone release where there were *not* stories like this? Most or all have turned out to be false.
Rating: 37 Votes
16 months ago
Every. Year. Same. Stupid. Story.
Rating: 36 Votes

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