Apple reportedly cancels production boost for the iPhone XR

Apple has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which launched last month, the Nikkei reported on Monday.

"For the Foxconn side, it first prepared almost 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", the Nikkei quoted a source as saying. "The utilization for the XR production is not reaching its maximum capacity now", another source said.

"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units", Nikkei report quotes a source as saying.

Before we dive into this, I want to recommend caution where Apple and iPhones are concerned.

It seems that Apple has realised that the demand of the newly launched iPhone XR is not up to the mark. The phone does appear to have ramped more slowly than some of Apple's previous flagships, but it became the bestselling phone through much of the first half of 2018. While the iPhone XS and iPhone XS Max are undoubtedly powerful and, with their OLED screens and dual cameras, capable, they're also expensive.

In 2016, Apple introduced a cheaper iPhone called the SE, at a starting price of $399, but failed to lure more customers to buy that product.

With regards to the growing uncertainty caused by the US-China trade disputes, Tung said Pegatron, being a technology company with global deployments, does not see it necessary to relocate its production capacity completely out of China, noting that a 3% capacity relocation might be sufficient.

Despite Apple hinting at a lesser performance deterioration compared to the older models, the feature will eventually tune down the CPU' performance to prevent the device from abruptly switching off. So Apple is canceling plans to boost production over the holidays. It's possible iPhone XR demand isn't meeting Apple's expectations, but exactly the reason that's happening is hard to determine.

  • Fernando Stephens