iPhone XR demand reportedly forcing Apple to cut production expansion plans

Posted:
in iPhone
Apple, after seeing allegedly poor demand for the iPhone XR, has reportedly told assembly partners Foxconn and Pegatron to stop any preparations the firms are making for new smartphone production lines specifically for the recently-launched model.

Apple CEO Tim Cook at a Chinese Foxconn factory.
Apple CEO Tim Cook at a Chinese Foxconn factory.


The iPhone XR, Apple's latest iPhone release from late October, has been available for only a short amount of time. While the manufacturing of major products could prompt an expansion of production to cope with increased demand, similar plans to do the same for the new iPhone are said to have been scrapped.

A source familiar with the situation told Nikkei Asian Review "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."

It is claimed the reduction would mean Foxconn would produce around 100,000 fewer units per day, which the source claims is between 20 percent and 25 percent lower than the "original optimistic outlook."

Pegatron, Apple's other main iPhone XR assembler, is also said to be suspending its plans to increase production, and is waiting for more information from Apple. "The utilization for the XR production is not reaching its maximum capacity now," advised the source.

Third iPhone assembly partner Wistron was also previously asked to stand in for a rush of orders if necessary, but the supply chain source suggests no orders will be provided to the company over the holidays.

A month ahead of the iPhone XR's release, a report claimed Apple was planning to increase production after the initial launch period and into December, with the model anticipated to make up 50 percent of production.

Analysts have estimated initial sales of around 9 million units in the first weekend, beating the iPhone 8's launch, but Rosenblatt Securities' Jun Zhang advised to investors he believed there to have been "weak pre-orders" and would start reducing production in November and December for all of its new models.

While the iPhone XR orders are allegedly dropping, Apple is apparently asking for more iPhone 8 and iPhone 8 Plus handsets to be produced.

"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units," a report source advised. Previously set for 20 million units, the report claims this now brings the total orders to Foxconn and Pegatron for both older models up to 25 million units.

Apple is now said to be reviewing the demand for iPhones on a weekly basis, the source added, in order to quickly adjust orders to match the market.

Changes in production levels after launch are not an unexpected phenomenon, as manufacturers typically try to produce enough to cover demand without making too many or too few units. As the source of such stories stem from unnamed sources within the supply chain, and sometimes with varying accounts between publications, there is no guarantee that the reduction claims are in fact true.

Specifically, the Nikkei Asian Review has a mixed track record on details of Apple's manufacturing plans. It also isn't clear how any "cutbacks" now compare to previous seasonal adjustments.
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Comments

  • Reply 1 of 73
    Typical bear-market FUD, hopefully it only lasts this week and not the next 2 years while they try and push the stocks as low as they can.
    DAalsethnetmageJFC_PAchasmcornchipwatto_cobra
  • Reply 2 of 73
    Guys... this exact same story ran last year, but about the X. Why are we amplifying their voice, again? Nikkei was one of the worst offenders in the groupthink of analysts looking at the supply chain to make a wild guess about iPhone orders. I know there are a lot of caveats at the end of the article, but it seems like not even acknowledging their existence might be more satisfying. Lol
    larryasphericDAalsethpscooter63netmageSpamSandwichdws-2anantksundaramgeorgie01StrangeDays
  • Reply 3 of 73
    larryalarrya Posts: 543member
    Bought mine on Saturday.  I think I am in love with this phone - so fast (coming from 6), screen is crisp and bright and I cannot see any pixels, and the battery life is phenomenal.  Even just call quality, probably due to better speakers and mics, is way better for both ends of the conversation.

    The only possible criticism I have is that it is a little on the heavy side, but it's nothing unmanageable.
    cornchipwatto_cobra
  • Reply 4 of 73
    Going to be interesting to see Apple find that market ceiling for phone prices. 
    elijahgdesignr
  • Reply 5 of 73
    mike1mike1 Posts: 1,847member
    Here we go again.
    SpamSandwichcornchipwatto_cobra
  • Reply 6 of 73
    I bought an XR (from a 6S) and if someone as skeptical as me has finally upgraded then I think millions of others will also, more than ever, the XR will be Apple's best selling phone ever. Any supply chain data that appears to show otherwise will just be misinterpreted (as usually happens). 
    edited November 2018 georgie01watto_cobra
  • Reply 7 of 73
    We have a choice of three things.

    1) This is the same old pile of excrement that is trotted out one or more times a year.
    2) Apple is doomed and will file for Chapter 7 before the end of their next fiscal year
    3) Go Meh and carry on regardless.

    I tend to opt for 3)

    chiachasmwatto_cobra
  • Reply 8 of 73
    I thought the XR was the best value.  I’ll take the report with a grain of salt.
    cornchipwatto_cobra
  • Reply 9 of 73
    NY1822NY1822 Posts: 591member
    XR will be Apple's best selling smartphone, based on value, price, and marketing.
    edited November 2018 watto_cobra
  • Reply 10 of 73
    how about Apple stop making the same phone year after year come up with a new concept or a new UI  They act like we care about faster this and faster that we want a new phone  I refused the update I will stay with my X Until I am impressed
    indieshack
  • Reply 11 of 73
    There could still be truth to it. 

    $750 is still expensive. Flagship prices only 2 years ago for the mid range phone option if you consider the XS and XS Max the flagships now. 

    Broadly speaking , Apple might be finding that less people than expected are willing to shell out top money when cheaper options are available (iPhone 8)

    The XR’s biggest problem is its size. I know people who have said they no longer have an upgrade path from either a 6/6S/7 etc as they don’t want a bigger phone and the XS is too expensive. The 8 is the only option for them and it’s not much of an upgrade. My wife is one of them. She would (and is) buying nothing instead which is a lost sale for Apple as she really wanted to upgrade. 
    elijahgdesignrmrboba1
  • Reply 12 of 73
    larryjwlarryjw Posts: 340member
    This is news? Apple is the gorilla in the room, and their suppliers are required to adjust production based on Apple’s needs. Apple is the master of just-in-time production and supply chain management. They measure and adjust continually. 

    This is report should simply read “Apple is adjusting their production mix this week, as usual”. 


    elijahgpscooter63JWSCwatto_cobra
  • Reply 13 of 73
    BebeBebe Posts: 116member
    Same old story!
    watto_cobra
  • Reply 14 of 73
    how about Apple stop making the same phone year after year come up with a new concept or a new UI  They act like we care about faster this and faster that we want a new phone  I refused the update I will stay with my X Until I am impressed
    It's not practical for Apple to do what you're asking. Not everyone who uses a smartphone is asking for big changes in smartphone design every few years. I'd be happy with much better battery life even if the same design remains. I think it makes more sense for you to keep the same iPhone X for a few years to get your money's worth. I don't think any consumer should be replacing their smartphone every year. What Apple needs to do is to charge less money for the iPhone to reach more consumers who actually can't afford a more expensive smartphone.
    elijahg
  • Reply 15 of 73
    sphericspheric Posts: 1,730member
    how about Apple stop making the same phone year after year come up with a new concept or a new UI  They act like we care about faster this and faster that we want a new phone  I refused the update I will stay with my X Until I am impressed
    Yes it is vitally important to forget that no iPhone ever made has been aimed at the people owning the immediately preceding generation. 

    Apple acts like most people keep their phone for more than a year I refused the update I stayed with my 6s Until I was impressed (and bought the Xs)
    watto_cobra
  • Reply 16 of 73
    elijahgelijahg Posts: 821member
    how about Apple stop making the same phone year after year come up with a new concept or a new UI  They act like we care about faster this and faster that we want a new phone  I refused the update I will stay with my X Until I am impressed
    Except it's not the same? What do you expect them do do every year, change the shape of it from rectangular to square to sound for no reason? Or change the UI that many are comfortable with just for sake of change?
    netmagecornchipwatto_cobra
  • Reply 17 of 73
    Since we already know for certain Apple is giving weak guidance for the next financial quarter that it is highly likely there may be production cutbacks. I don't think this is unexpected news. Apple should adjust production to meet demand. That's just the sensible thing to do. Still, for all we know, instead of higher XR demand, maybe there is higher XS or XS Max demand and Apple will add production lines for those models. Although I don't think that scenario is likely, I'm only saying it's possible. To me, Apple's weak guidance indicates there is going to be a iPhone sales decrease for the holiday season. I'm still not certain what poor demand or weak demand means in terms of actual unit numbers. I'm not sure anyone but Apple knows the actual unit numbers. I'm not surprised about this article as weak guidance already had me expecting lowered iPhone sales targets.
  • Reply 18 of 73
    designrdesignr Posts: 464member
    While the iPhone XR orders are allegedly dropping, Apple is apparently asking for more iPhone 8 and iPhone 8 Plus handsets to be produced.

    If this part is true, then Apple just learned a valuable lesson. They've found where the price-elasticity curve bends for the iPhone.

    Frankly this would not be terribly surprising. It's not hard to see we probably reached "peak smartphone" a couple of years ago. And by "peak smartphone" I simply mean that the smart phone has gotten to be enough for the vast majority of consumers and the obsessive-compulsive need to have the very latest and greatest every year is waning. I mean seriously, the SE and/or 6-series probably meets the needs 80% of consumers.
    elijahgatomic101muthuk_vanalingam
  • Reply 19 of 73
    And these “supply chain” rumors will continue until Apple’s earnings report. Same as every holiday quarter. And of course the stock is down 2% pre market. Even though these rumors are rarely correct Wall Street continues to panic over them. And Elon Musk thinks Tesla is the most shorted stock...
    andrewj5790elijahgMagentaPaladincornchip
  • Reply 20 of 73
    lewchenko said:
    There could still be truth to it. 

    $750 is still expensive. Flagship prices only 2 years ago for the mid range phone option if you consider the XS and XS Max the flagships now. 

    Broadly speaking , Apple might be finding that less people than expected are willing to shell out top money when cheaper options are available (iPhone 8)

    The XR’s biggest problem is its size. I know people who have said they no longer have an upgrade path from either a 6/6S/7 etc as they don’t want a bigger phone and the XS is too expensive. The 8 is the only option for them and it’s not much of an upgrade. My wife is one of them. She would (and is) buying nothing instead which is a lost sale for Apple as she really wanted to upgrade. 
    Agree with most of what you say but to say that the 8 is not much of an upgrade I have to disagree.   The 8 has the same A11 chip used in the X phone which is faster than nearly everything on the market except the newest iPhones.   It has wireless charging which I love.   It has much better speakers than previous 6/6s/7 phones.   It also is smaller and lighter than the new "flagship" XS and XR phones.
    elijahgrare commentmbenz1962henrybaycornchip
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