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

[MacRumors]

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.

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

 

[Rogifan]

And here we go with negative iPhone reports from the “supply chain”. This is what we’ll get from now until the next earnings report.

 

[ob81]

There are a lot of different iPhones out there now. They still sell some old models. I think this has more to do with them offering several iPhones at once instead of weak iPhone demand.

 

[Merackon]

Something something "Apple is Doomed!!!" in 3...2...1...

I would personally watch this pan out over the next year to see if the XR experiment works. Maybe once more of them are available for people to try then the sales will go up instead of Spec Sheet Spotters ruining everyone's day.

 

[Gooberton]

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

 

[Abazigal]

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

 

[Merackon]

There are a lot of different iPhones out there now. They still sell some old models. I think this has more to do with them offering several iPhones at once instead of weak iPhone demand.

I think the delay in release also may have had an impact on this. Having over a month between shipping of the flagship and a comparable lower base model will surely have swayed a good number of buyers in my opinion.

 

[Skeith]

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

 

[levitynyc]

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.

 

[rmoliv]

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.

 

[Tiger8]

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

 

[Delgibbons]

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.

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.

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

That 5 mm bezel though

 

[Agit21]

Went from the iPhone 7 to the X (and yes its too big imo, miss my 7 already), dont see why I would spend 200€ more for the Xs.
The Xr feels and looks cheap, for that kind of my Id rather keep my 7 or wait another year.

 

[aneftp]

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

The largest USA carrier verizon stopped reporting “revenue per line” around 2012. Why? Cause the mobile cell phone customer growth in the USA had essentially ended. Instead they started reported reported revenue per account. A subtle or huge difference in reporting. Cause verizon knew thus were being killed with add on family lines which decreased revenue PER LINE.

Apple is doing the similar thing not reporting iPhone sales. Rather integrating iPhone earnings into the rest of the Apple earning. Cause growth had stopped.

 

[spiderman0616]

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

None of their competitors share unit sales. Unit sales can’t grow forever and don’t tell the whole story. The only mistake Apple is making here is that they should have stopped sharing unit sales years ago.

 

[Rogifan]

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

Yep and people will believe whatever rumor fits their narrative.

 

[marty11]

Either tell investors how.many units are sold or let them speculate pretty simple choice.

 

[spiderman0616]

Either tell investors how.many units are sold or let them speculate pretty simple choice.

Nikkei pulls this nonsense every single year. This report would have come out either way.

 

[Abazigal]

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

Depends on how you want to interpret those numbers.

I do believe that unit sales will likely start to decrease next year (which is why Apple made the decision to stop reporting them now). However, unit sales tell only one aspect of the whole story (for example, you can still have a larger iOS install base despite flat iPhone sales from the grey iPhone market, which in turn means that Apple can still sell tons of iPhones at higher ASPs, plus more users to sell apps and services to).

Revenue will continue to increase, and Apple will likely be just fine, but I am already bracing myself for industry data firms having a free reign in making up whatever numbers they please without worrying about being wrong since Apple won’t call them out anymore.

And bloggers and haters can now pick the most outrageous numbers to spin their narratives.

It’s going to be crazy town.

 

[WatchFromAfar]

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

Don't you feel Apple not reporting iPhone numbers is a slap in the face for developers? Surely they want to know the potential market size for their application.

 

[Icaras]

Well...if true, I hope Apple responds by releasing that smaller XR at a hundreds buck cheaper. Then we can get back to traditional iPhone pricing again.

 

[avtella]

The market is becoming saturated in general along with people keeping phones for longer between upgrades, I believe some stats were saying it’s close to 3 years on average now between upgrades vs around 2 or so a few years back. The higher prices of the XS and XS Max relative to models of old can only compensate so much. Compared to like 5-6 years ago even budget models have gotten powerful enough to be pretty smooth in everyday use with a decent feature set, in Apple’s case this would be older models.

 

[Trixster]

It´s no real surprise though that initial sales of the XR are generally lower then the Xs. The Xr is positioned at another market of cheaper phones, aka people who buy them are not as tech savvy as the ones who buy the Xs. In essence the Xr is not a phone people buy at launch rather then strong sales throughout its lifecycle.

 

[44267547]

Hope this is a good indicator to Apple. Your phones are too expensive

Compared to what? Have you payed attention to the competition prices? Their phones are priced just as high with the Google Pixel and Samsung Note, it’s not just Apple with inflated prices with smart phones.

 

[spiderman0616]

Don't you feel Apple not reporting iPhone numbers is a slap in the face for developers? Surely they want to know the potential market size for their application.

Developers care about install base, not unit sales.