Apple Cancels Plans to Boost iPhone XR Production

iPhone XR side profile

It looks like the iPhone XR is not doing as well as analysts and Apple had expected. A Nikkei report citing sources claims that Apple has asked Foxconn and Pegatron to put a halt on additional production lines for the iPhone XR.

Apple had initially informed Foxconn to set up nearly 60 assembly lines for the iPhone XR. However, it is now using only around 45 lines and does not require any additional production capacity. As per the source, this means Foxconn would be producing 100,000 few units of the iPhone XR daily than initially estimated — a decline of around 20-25 percent.

Like Foxconn, Pegatron has also been asked not to expand its iPhone XR production line. Instead, Apple is asking its suppliers for more units of the iPhone 8 and iPhone 8 Plus which received a 20 percent price cut when Apple unveiled the iPhone XR and iPhone XS back in September.

“Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units,” one source said. Apple previously planned 20 million units for the older iPhone models this quarter, but raised the figure to 25 million units, the individual said.

Our Take

Before Apple unveiled the iPhone XS and iPhone XR, it was widely expected that the latter would do particularly well in Asian and other emerging smartphone markets thanks to its lower price tag. Analysts expected the iPhone XS series to perform well initially but eventually, they expected the iPhone XR to account for 50 percent of the total 2018 iPhone shipments.

However, it looks like the iPhone XR is not doing as well as expected, with Apple no longer looking to expand its availability. The device was available for launch day shipping for days after initially going up for pre-order thereby hinting at lukewarm consumer interest. Reputed analyst Ming-Chi Kuo confirmed that the demand for iPhone XR has been lower than anticipated, though he believes its sales would be more stable in nature than the iPhone XS due to the replacement demand from customers looking to upgrade from the iPhone 8.

[Via Nikkei]