• Apple has informed Foxconn and Pegatron about the cancellation
  • Company had also asked Wistron to stand by for rush orders
  • Wistron will receive no orders for the iPhone XR this season
  • Apple has told its smartphone assemblers to halt plans for additional production lines dedicated to the iPhone XR, which hit shelves in October, according to a new report.
  • The company warned last week that sales for the crucial holiday quarter would likely miss Wall Street expectations.

Apple, Cancelled, iPhone XR, Production Boost, Lines, NikkeiVisitors inspect the new iPhone XR during an Apple special event at the Steve Jobs Theatre on September 12, 2018 in Cupertino, California. Apple released three new versions of the iPhone and an update Apple Watch.

Apple iPhone XR had hit the shelves last month, however, market watchers believed that the new iPhone saw lower than expected sales. The company has reportedly cancelled the iPhone XR production boost, which was announced to meet the huge demand for the phone.

Apple has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR ₹ 76,799 which hit shelves in October, the Nikkei reported on Monday.

Apple, Cancelled, iPhone XR, Production Boost, Lines, Nikkei

Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the company will receive no orders for the iPhone XR this season, the report said, citing supply chain sources.

“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,” the Nikkei quoted a source as saying.

At its iPhone launch event in September, Apple introduced the lower-cost iPhone XR, made of aluminum, along with two other models, the XS and XS Max.

Apple, Cancelled, iPhone XR, Production Boost, Lines, Nikkei

Five years ago, Apple cut production orders for its plastic-backed iPhone 5C ₹ 8,499 a month after its launch, fueling speculation of weak demand for the model.

The Cupertino, California-based company warned last week that sales for the crucial holiday quarter would likely miss Wall Street expectations.

Apple, Cancelled, iPhone XR, Production Boost, Lines, Nikkei

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.

“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. “The utilization for the XR production is not reaching its maximum capacity now,” the source added.

“Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units,” one source added.

Apple had previously planned 20 million units for the older iPhone models this quarter, however they have raised the figure to 25 million units now. “The chance for Apple to revise upward its production for iPhone XR and iPhone XS during this Christmas holiday season is very thin, given the forecast provided by the company and our supply chains check,” Jeff Pu, a Hong Kong-based analyst for GF Securities stated.

He added that the demand for the most premium iPhone XS Max will be slightly better than that for the other two new models.

Apple did not immediately respond to Reuters’ request for comment. Foxconn and Pegatron each said they would not comment on specific customers or products.

Apple, Cancelled, iPhone XR, Production Boost, Lines, Nikkei

Key Insights

  • Apple’s lower-priced XR model was expected to be popular over the holiday season, luring owners of older iPhones to upgrade. It retains the key advances of the first iPhone X — facial recognition and an edge-to-edge display — but is cheaper while being noticeably larger at 6.1 inches.
  • Foxconn is now using around 45 production lines for the iPhone XR model, compared with 60 it first prepared, meaning it would produce around 100,000 fewer units daily, down 20 to 25 percent from its original outlook, said Nikkei, citing one of the people.
  • Pegatron XR production also isn’t reaching maximum capacity, and Wistron, a smaller iPhone assembler, won’t receive any orders for iPhone XR this holiday season. Apple has ordered around 5 million more units of iPhone 8 and iPhone 8 Plus from suppliers, raising the total order to 25 million units this quarter, said the Nikkei report.
  • Apple didn’t respond to Nikkei’s request for comment. Foxconn, Pegatron and Wistron declined to comment.

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