Apple cancels production boost for iPhone XR

Judy Cobb
November 6, 2018

The $749 model is Apple's budget iPhone, and at a few hundred dollars cheaper than the flagship XS and XS Max was meant to stir consumer interest among more cost-conscious buyers. Weakened demand for smartphones globally might not hurt Apple's revenue too much, but suppliers could feel the strain. It's entirely possible that the reason Apple doesn't need very many XR's is that most customers are choosing the highest-end models or defaulting to the lower-end, cheaper products.

Apple has reportedly shelved plans to expand iPhone XR production, with claims that demand for the more affordable smartphone has underwhelmed.

Apple has informed several of its suppliers that expectations should be tempered for orders of the Apple iPhone XR.

Cutting corners: iPhone manufacturers are not able to make full use of their production capabilities and are closing down unneeded assembly lines. According to Nikkei, this means that Foxconn will be producing almost 100,000 units less every day based on the new forecasts available.

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Apple shares fell almost 4 per cent on Monday after the report from the Nikkei financial daily, which fuelled concerns that the iPhone XR - the cheapest of three iPhones unveiled in September - was facing weak demand just days after it hit shelves.

It's too early to tell if the iPhone XR will have a similar fate as the iPhone 5C.

In contrast, the iPhone XR's $750 starting price made it seem a relative bargain. Apple has also asked smaller iPhone assembler Wistron to be on standby for rush orders. Apple is also said to have revised planned units for older iPhone models for this quarter from 20 million to 25 million. 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". This is not the first time, five years ago, when Apple launched the iPhone 5C with plastic back, it had cut production orders a month after its launch, which fuelled speculation of weak demand for the model.

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