Low Demand Of iPhone XR Forces Apple To Cancel Production Boost

Apple has reportedly asked its assembly partners Pegatron and Foxconn to cancel plans for expanding the phone production lines mostly due to the poor demand for its recent iPhone XR.

The iPhone XR, among three new iPhones, were recently released on 26 October. While the production of popular products could be expanded to meet the rising demand, a similar plan for the latest iPhone XR is claimed to have been canceled.

As reported by Nikkei Asian Review, Foxconn initially prepared around 60 production lines for iPhone XR but only 45 out of 60 are now in use, as Apple said that it doesn’t need that many for now.

It is reported that this reduction would result in the production line of Foxconn producing 100,000 fewer iPhone units a day, which is claimed to be around 20 to 25% lower than the initial optimistic estimate.

Another main assembler of Apple - Pegatron also reportedly stops the firm’s plan to expand the production for now, and wait for further instruction from Apple. "The utilization for the XR production is not reaching its maximum capacity now,", stated by the information source.

The third assembly partner of Apple - Wistron was previously instructed to be prepared for a rush of iPhone orders if needed. However, the source suggested that they were told to eliminate all expectations of making any iPhone XR parts

A month before the iPhone XR’s launch, Apple was reportedly planning to expand the production line after the first release period and also into December, with the iPhone XR expected to occupy for 50 percent of the production.

Many analysts have made an estimation that the initial sale figure will be 9 million phones in the first weekend, surpassing the launch of iPhone 8. But Jun Zhang - a managing director of Rosenblatt Securities believed that pre-order figure of the iPhone XR was weak and Apple would start cut the production in both November and December for all three new iPhones.

While orders of the iPhone XR are dropping, Apple is actually requesting its partners to produce more 8 and 8 Plus models.

"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units," said by an unknown source. It was previously set at 20 million units and now Apple demands Pegatron and Foxconn for 5 more million units of both iPhone 8 models.

The source claimed that Apple is reviewing the iPhone’s demand every week so that they can quickly make adjustments to the orders to match the smartphone market.

Adjustments in production levels after a product’s launch are not really an unexpected event, as phone makers usually try to keep production of their units enough to cover the demand without having too few or too many units. As the information was released from unknown sources in the supply chain, no one can know for sure if the claims are indeed true.