Apple Tells Suppliers to Cut iPhone XR and XS Production by 10% for Next Three Months

Apple is telling its suppliers to cut production on new iPhones by 10 percent over the course of the next three months, reports Nikkei.

Apple made the request of its suppliers late last month, asking them to produce fewer iPhones for the January-March quarter.


This is the second time that Apple has recently cut down on iPhone production, and Nikkei says Apple made the decision prior to issuing its guidance downgrade last week.

The production revision applies to all of Apple's new iPhone models, including the iPhone XS, XS Max, and XR. "The level of revision is different for each supplier and depends on the product mix they supply," an unnamed source told Nikkei.

A second source said that overall production volume of both new and old iPhones will be reduced by approximately 40 to 43 million units for the January-March quarter, down from an earlier projection of 47 to 48 million units.

Due to weak iPhone sales in China, the effects of the U.S.-China trade war, cheap battery replacements, and other factors, Apple cut its Q1 2019 revenue guidance to $84 billion, down from the $89 to $93 billion guidance issued in November, and with the production cuts, those issues may continue further into the year.

Apple CEO Tim Cook just today said, however, that reports suggesting the iPhone XR is a flop or selling poorly are "bologna," and that the device has been the best selling iPhone every day since it launched.

Related Roundups: iPhone XS, iPhone XR

This article, "Apple Tells Suppliers to Cut iPhone XR and XS Production by 10% for Next Three Months" first appeared on MacRumors.com

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Nikkei: Apple Told Suppliers to Cancel Plans for Additional iPhone XR Production Lines

Apple has told iPhone assemblers to halt plans for additional production lines dedicated to the iPhone XR, claimed a new report on Monday.

According to sources cited by the Nikkei Asian Review, Apple has informed Taiwanese smartphone manufacturers Foxconn and Pegatron of the cancelation, which the report said signaled "disappointing demand" for Apple's lower cost flagship model, which launched late last month.

"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.

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, this person said.
As for Pegatron, the iPhone assembler is said to be "suspending plans to ramp up production and awaiting further instructions from Apple," according to Nikkei's supply chain sources.

Apple has reportedly also asked smaller iPhone assembler Wistron to stand by for rush orders, but Nikkei's sources said the company will receive no orders for the iPhone XR this holiday season.

Nikkei's reporting on iPhone supplies has been off the mark in recent years, with claims of Apple slashing iPhone production orders on weak demand being at odds with later sales figures.

The latest report also clashes with recent remarks made by noted Apple analyst Ming-Chi Kuo, who said that iPhone XR pre-order demand in the first three days of the device's availability was "better than that" of the iPhone 8 and iPhone 8 Plus during the same period last year.

Kuo said that although pre-order demand immediately after launch has been lower for the iPhone XR versus the flagship iPhone XS models, overall iPhone XR shipment momentum is "more stable" because it will drive more customers to upgrade than the iPhone 8 series over time.

On the flip side, some analysts expressed concerns that the iPhone XR's strong availability following launch implied weak sales of the $749 handset.

In addition, Apple's $89 to $93 billion revenue forecast for the first fiscal quarter of 2019 was cautious in its earnings call, but Apple blamed this on foreign exchange costs, issues with supply/demand balance, and weakness in emerging markets.

Apple CFO Maestri also explained that Apple had "some uncertainty" around supply/demand balance for the "unprecedented number" of new products the company had launched over the last six weeks.

The launch timing of the new iPhones was also said to be a factor, with the iPhone XR coming later than the XS and the XS Max. This had an effect on Apple's Q4 revenue and is also expected to impact Q1.

Related Roundup: iPhone XR
Buyer's Guide: iPhone XR (Buy Now)

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Nikkei Says AirPods Charging Case ‘Will Soon Be Able’ to Wirelessly Charge an iPhone

An upcoming version of the AirPods charging case will be able to wirelessly charge a compatible iPhone, according to Nikkei Asian Review, although proceed with skepticism, as there's a good chance the report is off the mark.


The first paragraph from Cheng Ting-Fang and Lauly Li, in a report titled "Apple to unveil iPhone wireless charging with AirPods":
Users of iPhones will soon be able to wirelessly charge their handsets using the charging case for Apple's popular AirPods wireless earphones, according to an industry source familiar with the plan.
The report claims the charging case could be available as soon as the end of this year, although the timeframe is subject to change.

The report adds:
The development would add to Apple's much-anticipated AirPower wireless charging mat, unveiled last year and due out soon, bringing chief designer Jony Ive's call in 2016 for a "truly wireless future" a step closer. Apple has previously said it is working on a wireless charging case for AirPods that could also be topped up with the AirPower pad, though it gave no further details.
It's not entirely clear if the report is referring to the same AirPods charging case that Apple previewed alongside the iPhone X last year. Apple said that optional accessory will be released in 2018 alongside its AirPower charging mat.

All in all, it's a rather strange report that inspires a lot of questions. Would a user hold or lay their iPhone against the AirPods charging case? The case's current floss-container-like design means that the iPhone would need to be precisely balanced on top of it, if not held together in your hands.

In addition, the AirPods case is and will likely remain too small to adequately charge the latest iPhones. The battery in the current case has a capacity of 398 mAh, roughly 14.6 percent of the iPhone X's battery capacity of 2,716 mAh, limiting its usefulness to emergency or must-have situations.

Is the report backwards? Is it possible some iPhones will be able to wirelessly transfer power to the AirPods charging case on the go? Or, more likely, is the report simply mistranslating the fact that the latest iPhones and the AirPods charging case will be compatible with the AirPower charging mat?

At this point, all we know for certain is that Apple will release both its AirPower charging mat and optional AirPods charging case later this year. According to the reliable Mark Gurman, Apple is aiming to release the AirPower by September, so there's a good chance it'll launch alongside the next iPhones.

Related Roundups: 2018 iPhones, AirPods
Buyer's Guide: AirPods (Caution)

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Samsung to Slash OLED Panel Production on ‘Weak Demand’ for iPhone X, Claims Nikkei

Samsung plans to slash its OLED panel output in response to Apple's decision to cut production of iPhone X due to "weak demand", the Nikkei Asian Review reported on Tuesday. Samsung will make OLED panels for 20 million fewer iPhones at its South Chungcheong plant in the January to March quarter, a lot lower than its original goal of supplying panels for 45 million to 50 million iPhones, according to the paper.


Samsung is said to have made a 13.5 trillion won ($12.6 billion) capital investment in anticipation of the originally expected number of OLED panel orders from Apple. The new target reportedly reduces plant production to roughly 60 percent of original forecasts, and Samsung's display business is expected to suffer revenue declines for the first half of 2018. Samsung stock fell as much as 2.3 percent in morning trade, reported Reuters, while shares of some Japanese OLED component makers also declined.

Today's report follows previous claims by Nikkei that "weak demand" for iPhone X has forced Apple to slash its production target by half in the three month period from January. However the claim doesn't tally with Apple's own results reported at its recent quarterly conference call earlier this month, and it's unclear which supply chain sources the publication is relying on. Apple CEO Tim Cook has dismissed these types of reports in the past, suggesting that the company's supply chain is very complex and that any singular data point is not a reliable indicator of what's actually going on.

During its record financial results report for the first fiscal quarter of 2018 (which corresponds to the fourth calendar quarter of 2017), Cook said the iPhone X was the top-selling iPhone model every week since it had debuted in November. iPhone shipments were down 1.2 percent year-over-year compared to the year-ago quarter, but only because of an extra sales week last year – Apple's growth was actually 21 percent year-over-year on an adjusted basis.

Related Roundup: 2018 iPhones

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Apple’s Decision to Slash iPhone X Production Volume in Q1 2018 Could Delay Future OLED Models

Apple is set to halve its 40 million iPhone X production target in the three month period from January, reported Nikkei Asian Review on Monday without naming a source.


The U.S. tech giant notified suppliers that it had decided to cut the target for the period to around 20 million units, in light of slower-than-expected sales in the year-end holiday shopping season in key markets such as Europe, the U.S. and China.

The iPhone X, Apple’s first smartphone equipped with an organic light-emitting diode display, has failed to catch on globally — something many put down to a price tag starting at $999.

Part of the reason for the high price tag of iPhone X is said to be down to the cost of OLED panels made by Samsung, which is the only supplier of the component that can guarantee Apple a steady supply of the screens. According to Nikkei, Apple is now considering an increase to the proportion of LCD iPhone models by reducing production of the OLED screen models scheduled for release this year.

Apple is expected to launch a trio of new iPhone models in 2018, including 5.8-inch and 6.5-inch models with OLED displays and a 6.1-inch model with an LCD display, according to respected KGI Securities analyst Ming-Chi Kuo. However, at least one other analyst has predicted that the LCD-to-OLED ratio this year will actually be 2:1.

DigiTimes‘ Luke Lin believes Apple is increasingly leaning towards releasing two LCD-based models and a single larger 6.4- to 6.5-inch OLED model. Indeed, today’s Nikkei report claims lackluster sales for iPhone X could actually result in a delay to the company’s plans to introduce OLED screens in other models, potentially adding weight to DigiTimes‘ prediction.

The production cuts for the X will have a domino effect on manufacturers that have supplied high-performance components for the handset, with the combined impact expected to run into billions of dollars. It could also slow down the shift at display manufacturers from LCD to OLED technology.

Nikkei added that Apple is expected to maintain a total production target of 30 million units for lower priced models such as the iPhone 8, iPhone 8 Plus and iPhone 7. Apple Japan replied to Nikkei’s request for comment by stating that it would confirm the details with headquarters.

Related Roundup: 2018 iPhones

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Taiwanese Apple Suppliers Face Falling Stock Prices Amid Ongoing Concern Over Weakened iPhone X Demand

Three major Apple suppliers faced falling stock prices on the Nikkei Asia300 Index today, believed to be directly related to "concerns over demand for iPhone X." The three Taiwanese suppliers were Largan Precision, Hon Hai Precision Industry (Foxconn), and Taiwan Semiconductor Manufacturing Company, dropping 4.4 percent, 1 percent, and 3 percent on the index, respectively.

iPhone X demand concerns and decline in supplier stock prices came after the latest analyst report by JP Morgan yesterday, predicting "slashed" iPhone X orders in the first part of 2018. In a research note reported by CNBC, analyst Narci Chang said "high-end smartphones are clearly hitting a plateau this year," singling out Apple by forecasting that iPhone X manufacturing "might be down 50 percent quarter-over-quarter."


Reports of "weakened" iPhone X demand heading into 2018 began emerging late last year, mainly stemming from analyst belief that the high price of the device would eventually lead to reduced sales after early adopters got their iPhone X. These reports have caused several Apple suppliers to be anxious over low order visibility for the full range of iPhone 8, iPhone 8 Plus, and iPhone X models in Q1 2018. CLSA analyst Nicolas Baratte argued that the reported reduction of the iPhone X's Q1 2018 shipment forecast from 50 million units down to 30 million units "remains inflated."

Despite multiple stories about the iPhone X's plateaued demand in early 2018, the smartphone is believed to have sold well following its fall launch in 2017 and throughout the holiday season. Research data shared just yesterday by Canalys reported that Apple shipped 29 million iPhone X units in Q4 2017, making the device the "world's best-shipping smartphone model over the holidays."

Earlier in January, Kantar Worldpanel said that the iPhone X saw "stellar" performance in several countries during November of last year, though it was outsold by the iPhone 8 and the iPhone 8 Plus in the United States. Combined, Apple's three new iPhones captured the top spots for best-selling smartphone models during the month. Kantar's global OS data pointed towards "staggering" demand for the iPhone X in China from users said to be switching sides from rival smartphone makers.

We should get a better view of how the iPhone X sold soon, when Apple reveals its earnings results for the first fiscal quarter of 2018 on Thursday, February 1.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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iPhone Batteries Could Have Apple-Designed Power Management Chips Within Two Years

Apple is designing its own power management chips for use in iPhones within the next two years, according to Nikkei Asian Review.
Apple's new in-house power management chip would be the most advanced in the industry, according to the sources, and could have processing capabilities that allow it to better monitor and control power consumption among various components. That means iPhone users could expect devices capable of delivering better performance on lower power consumption.
Apple plans to replace around half of the main power management chips that go into iPhones with its own as early as 2018, but the transition could be delayed until 2019, according to anonymous sources cited in the report.

If the report is accurate, it could be a serious blow for Dialog Semiconductor, the British company that exclusively designs the current main power management chip for iPhone, iPad, and Apple Watch models. Apple reportedly accounted for nearly three quarters of Dialog Semiconductor's revenue in 2016.

The main power management chip controls an iPhone's battery, including charging capabilities and energy consumption. Apple's in-house version will supposedly be "the most advanced in the industry," which could pave the way for future iPhone models to have a better performance-to-battery life balance.

Taiwanese supplier TSMC will be the exclusive manufacturer of Apple's in-house power management chip, according to the report.

Today's report corroborates a prediction by Bankhaus Lampe analyst Karsten Iltgen, who earlier this year said that Apple will at least partially cut back on Dialog Semiconductor's supply of power management chips for future iPhones. Iltgen said Apple already has engineers working on the chips in California and Germany.

Dialog responded to the report with a statement claiming that "business relationships are in line with the normal course of business." The company's stock fell nearly 20 percent after the news broke.

Dialog Semiconductor could be the second large British company to lose significant business from Apple within the next year or two. In April, Imagination Technologies shares plunged after Apple informed the firm it plans to stop using its PowerVR graphics technology in its devices within two years.

Apple appears to be moving towards in-house design of several components, potentially including ARM-based Mac processors and iPhone modems.


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Supply Chain Hints at Apple Releasing Augmented Reality Headset No Later Than 2019

Taiwanese manufacturer Quanta Computer, a primary assembler of the Apple Watch, has revealed that it is working on an augmented reality product for an undisclosed company that some industry observers believe is Apple.

Google Glass Enterprise Edition

Quanta's vice chairman C.C. Leung suggested the device will be a "headset-like gadget with a fully transparent lens that allows users to see through and interact with the environment," according to Nikkei Asian Review.

"Currently, we see such a device available in the market no later than the year 2019," he told reporters after the company's earnings conference.

Leung noted that if an augmented reality device could carry a price tag lower than $1,000, it would likely become a hit in the market, although it is unlikely he has any knowledge of Apple's pricing plans if they even exist yet.

Quanta is the second Apple supplier to mention involvement with an augmented reality product after fellow Taiwanese company Catcher Technology said it has been tapped to supply parts for an undisclosed wearable device.

Bloomberg was among the first to report on Apple's work on an augmented reality headset. It said Apple aims to have the technology ready by 2019, and could ship a finished product as early as 2020, which is a slightly longer timeline.

The headset's custom operating system, based on iOS, is reportedly dubbed "rOS" for "reality operating system."

Apple hasn't finalized how users will control the headset and launch apps, but it is investigating touchscreens, Siri voice activation, and head gestures as it creates prototypes, the report said.

Apple CEO Tim Cook alluded to any headset being at least a few years away during a recent interview about augmented reality.

"Today I can tell you that the technology itself doesn't exist to do that in a quality way," Cook said. "We don't give a rats about being first, we want to be best in creating people's experiences. Something that you would see out in the market any time soon would not be something that any of us would be satisfied with."

Cook has repeatedly expressed a "profound interest" in augmented reality, which he favors over virtual reality. Apple's ARKit platform on iOS 11 enables developers to integrate augmented reality features into iPhone and iPad apps, potentially laying the foundation for what's to come.

Related Roundup: Apple VR Project

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Future HomePod Models Could Include Face ID Technology

A new rumor out of Apple's supply chain over the weekend suggests future iterations of the HomePod could come with 3D-sensing cameras supporting Face ID, similar to the front-facing technology on the iPhone X. Specifically, Inventec Appliances president David Ho mentioned recently that the company sees a trend towards both facial and image recognition technology being incorporated into smart speakers, without specifying which speakers in particular (via Nikkei).

Ho made the comment following Inventec's latest earnings conference, and analysts listening predict that he was likely referring to "the next generation of Apple's HomePod." Inventec Appliances is currently the sole supplier of both Apple's AirPods and HomePod, but also makes Xiaomi smartphones, Fitbit devices, and Sonos speakers, among others. Given the company's ties to Apple, analyst Jeff Pu predicts Ho's comments could suggest a Face ID-enabled HomePod in 2019.

"We see trends that engineers are designing smart speakers that will not only come with voice recognition but also incorporate features such as facial and image recognition," President David Ho told reporters after the company's earnings conference.

Jeff Pu, an analyst at Yuanta Investment Consulting, said Apple could roll out HomePods with 3D-sensing cameras in 2019.
Ho said that facial recognition features "are set to make people's lives more convenient and to make the product easier to use." He further clarified his comments, however, citing hesitancy about whether smart speakers "with more AI features" would become popular.

HomePod is set to release in December, although Apple has yet to confirm a specific release date for the new device. The upcoming smart speaker was first revealed during WWDC in June, where Apple explained it would be a music-focused speaker with high quality sound, deep Siri integration, and spatial recognition for providing the best sound in any space. Even before it was officially announced, rumors of the device's production were connected to Inventec Appliances.

Over a year before its unveiling at WWDC 2017, Apple's "Siri Speaker" was rumored to include facial recognition of some kind as another leg up on competing Echo products from Amazon. At the time, sources with knowledge of Apple's project said the device would be "self aware" and able to bring up different user profiles as people walk into a room, "such as the music and lighting they like." The HomePod launching next month will lack any such features and instead be controlled mainly through voice-enabled user prompts with Siri.

Related Roundup: HomePod

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iPhone X Supply Estimated to Remain Extremely Tight Until Next Year Due to Earlier Production Issues

iPhone X shipments to customers will total around 20 million units through the end of the year, suggesting availability of the smartphone will be extremely tight through the holiday shopping season, according to Nikkei Asian Review.


The reduction, said to be only half of Apple's originally planned amount for this year, is reportedly due to production issues with the iPhone X's new TrueDepth camera and 3D facial recognition system that powers Face ID and Animoji.

The good news is that Apple's manufacturers have supposedly improved their yield rate, but only towards the end of September. iPhone X is currently being produced at an estimated rate of 10 million units per month.

Apple is also believed to have already started negotiations with other manufacturers over additional production of certain parts, and there is a chance that output volumes could improve rapidly, according to the report.

Today's report echoes what we've heard a seemingly countless number of times from multiple industry observers.

Yuanta Investment Consulting analyst Jeff Pu, for example, originally estimated there would be 45 million iPhone X devices available to purchase. His latest prediction has 36 million units available through the end of the year.

KGI Securities analyst Ming-Chi Kuo also cut his iPhone X shipment forecast for the fourth quarter to 25-30 million units, down from 30-35 million. He expects 2-3 million units will be shipped into distribution channels ahead of the launch.

iPhone X pre-orders begin Friday at 12:01 a.m. Pacific Time on Apple.com, while the device formally launches November 3.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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