Nikkei has run a report suggesting that Apple has instructed its suppliers to reduce iPhone XR production, reflecting lower-than-expected demand.
The report has seen the stock fall almost 2% in pre-market trading, adding to last week’s 6% fall on weaker-than-expected guidance and nervousness around the company no longer reporting iPhone sales numbers …
Nikkei reports ‘disappointing demand’ for the latest iPhone to go on sale.
The piece implies that more people than expected are opting to save money by buying the older iPhone 8 and iPhone 8 Plus models instead of the XR.
“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.
Fellow Taiwanese manufacturer Pegatron faces a similar situation, suspending plans to ramp up production and awaiting further instructions from Apple, a supply chain source said.
“The utilization for the XR production is not reaching its maximum capacity now,” the source added.
The claim has been questioned, however. Former Fortune writer Philip Elmer-DeWitt points out that we’ve been here before – not just once, but twice. First, in January with the iPhone X, and then again in June with Apple’s orders for this year’s line-up.
My own view would be that it’s perfect possible for both views to be correct: that the iPhone XR is selling extremely well, and that it is not hitting Apple’s original expectations. That appears to be the story of the iPhone X last year, and it’s not at all hard to imagine the same thing happening again. An alternative explanation would simply be that Apple likes to cover all the bases, which includes contingency plans for unexpectedly high demand – plans which turned out not to be needed.
Analysts disagree on iPhone XR sales. The reviews, however, have been generally positive, backing my own view that the iPhone XR is the iPhone for most people.
