Apple cancels production boost for its lower-cost iPhone XR

Alfred Osborne
November 5, 2018

So Apple is canceling plans to boost production over the holidays.

Foxconn, the world's largest contract electronics manufacturer and the leading iPhone XR assembler, is apparently using "only around 45 production lines" of a prepared total of 60 to manufacture its share of Apple-requested units.

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. Reportedly, Apple has instructed three separate suppliers to either reduce or completely eliminate production expectations for the new device. A Nikkei report citing sources claims that Apple has asked Foxconn and Pegatron to put a halt on additional production lines for the iPhone XR.

The report, in Nikkei, states that demand for the iPhone XR has been "disappointing". The fact that it still offered Face ID, the Apple A12 Bionic processor, and a camera - albeit single, not dual - the same as that of the iPhone XS also impressed reviewers. Apple previously told Wistron to stand by for rush orders, but now the supplier will not receive any orders for the holiday season.

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Tied to this is the unexpected news that demand of the previous-generation iPhone 8, which Apple still sells, has jumped. And at a starting price of $749, it's the most affordable new iPhone on store shelves.

If this all sounds familiar, you're probably thinking of the Apple iPhone 5C, which Apple launched five years ago. According to the report, demand is still strong for those models and Apple not expects to produce 25 million iPhone 8 and iPhone 8 Plus units during the fourth quarter. With more customers choosing less expensive and older iPhones, Apple will have trouble raising the average selling price (ASP) of the device lineup, in keeping with its new strategy, which I call "Apple Jacks". Apple is also said to have revised planned units for older iPhone models for this quarter from 20 million to 25 million.

This information may help explain why Apple provided a dim forecast for iPhone sales in the current quarter.

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