Some lauded the mid-range handset for its iPhone XS-caliber performance, which is strategically available for a fraction of the price. While other, pre-launch supply-chain reports had even suggested that at one point, Apple was preparing to boost production of the mid-range handset by as much as 50 percent based solely on higher-than-expected sales outlook.
Sadly, if a new report published by the Nikkei Asian Review this morning is accurate, the iPhone XR’s sales performance hasn’t been that great, which has prompted Apple to instruct its suppliers and contract manufacturing partners to reduce production.
“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 supply-chain source familiar with the recent change of plans told Nikkei, adding that Foxconn — Apple’s largest contract iPhone assembly partner headquartered in Taiwan — would “produce around 100,000 fewer units daily to reflect the new demand outlook.”
As of the report’s publication, Apple’s stock (NASDAQ; AAPL) was down approximately 2.8 percent (this on top of the roughly 6 percent the stock shed last week.)
The report goes on to cite that Pegatron — Apple’s second-largest iPhone assembly partner, also headquartered in Taiwan — faces a similar situation, where it’s been instructed to suspend plans for ramping-up iPhone XR production pending further instructions from Apple, the same supply-chain source noted.
“The utilization for the XR production is not reaching its maximum capacity now,” the source said.
In a strange plot twist, Nikkei went on to cite Apple’s decision to shift its focus towards “requesting more of the older iPhone 8 and iPhone 8 Plus models,” which are about 20% cheaper than the iPhone XR ($599 vs. $749 base price).
“Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units,” a source told the publication, noting that Apple initially planned to produce 20 million iPhone 8 and 8 Plus models this quarter but that figure has been raised 25 million.
Piecing the details of the report together, it all appears to imply that more would-be iPhone buyers are opting to save the additional money by purchasing the older iPhone 8 or iPhone 8 Plus instead of the newer iPhone XR.
Of course, given how new the iPhone XR is, along with the fact that Apple recently decided to withhold its quarterly iPhone sales figures, we may never actually know how well or how poorly an iPhone model is selling again.
But, if Nikkei and its supply-chain sources are accurate on any level, it would appear that Apple’s 2018 iPhone pricing strategy may be backfiring.
Which new iPhone model did you upgrade to this fall? Let us know in the comments!