Iphone

Apple cancels iPhone XR production boost, claims report


A report by Nikkei claims that Apple has told iPhone assemblers Foxconn and Pegatron to abandon plans to increase iPhone XR production capacity. Is this true, and if it is, what does it mean for the new iPhone?

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There are three quotes by anonymous sources in the report that gets to the heart of the matter.

“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 utilization for the XR production is not reaching its maximum capacity now.”

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

First off, it’s hard to know if any of this is true, and now that Apple has stated that it will stop disclosing unit sales, we might never know.

That said, there are a few things to bear in mind.

First, Apple always rejigs production capacity following a product launch. And this isn’t an Apple thing. Most – sensible – companies do this, because they want enough capacity at the product launch to accommodate demand, and then ramping this back after that initial demand. History is littered with “Apple cuts production” headlines that meant little.

Another point worth making is that in the past, Apple has found it hard to keep up with iPhone demand, resulting in shortages and long wait times. While “XR production is not reaching its maximum capacity now” sounds bad on the face of it, for the end user who wants to order an iPhone today and get one tomorrow. And both the iPhone XS and iPhone XR are listed by Apple as being in stock, something Apple has found hard to do with earlier releases.

That’s a good thing. And it’s only achievable by having overcapacity at launch. And it makes sense to later scale this back.

What about the increased iPhone 8 and iPhone 8 Plus production? Well, this could mean that people are choosing the cheaper iPhones rather than going for the iPhone XR, and this could put a massive dent in Apple’s earnings next quarter (and this fits in with the conspiracy theory that Apple has stopped reporting on unit sales because it knows sales are soggy). However, it could also mean that the $100 price cut that the iPhone 8 got at the iPhone XS/iPhone XR launch is encouraging a low-end (well, the “starting at $600 end” of the market) to upgrade their old iPhones.

Bottom line, it’s hard to know whether this report is true or not, but even if it is, it probably doesn’t mean anything.

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