Apple’s Asia suppliers fall on report iPhone XR production boost canceled

Kelley Robertson
November 8, 2018

Earlier this week, a somewhat sketchy report surfaced claiming that Apple told its manufacturing partners to reduce iPhone XR production due to lower than anticipated demand. So it looks like customers are considering those the true lower-priced alternatives to the XS and XS Max, and not the XR.

The iPhone XR also managed to get glowing reviews, both from the critics and users, but it is still one of the pricier models, which may be affecting the smartphone demand. However, a new report suggests that the newly launched iPhone is not doing as well as the company had anticipated it to.

Monday's fall came after Apple told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which hit shelves in October, Reuters reported citing a Nikkei report. According to sources in the supply chain, smaller iPhone assembler Wistron was asked to stand by for rush orders, but after the decision of cancelling the production boost, it is not likely to receive any orders this holiday season. Apple is still selling the previous generation iPhone and is now producing it again in larger quantities.

On Friday, Apple's stock declined 6.6%, a day after it provided guidance for the holiday December quarter that fell short of Street expectations. Whether things change or not, that remain to be seen. We believe this potential round of iPhone XR production cuts by Apple may be attributable to the recently found PA quality issues.

In Foxconn's case, it prepared 60 production lines for the iPhone XR, but so far has only used 45.

Apple did not immediately respond to a Fortune request for comment on the report. The strong quarter, however, was driven by the older models, iPhone 8 and iPhone X.

Of course, given how new the iPhone XR is, along with the fact that Apple recently chose to withhold its quarterly iPhone sales figures, we may never actually know how well or how poorly an iPhone model is selling again.

A bunch of Apple's other Taiwanese suppliers fell sharply, including camera lens-maker Largan Precision Co, which was down more than 7 percent, and Flexium Interconnect, which fell 6 percent.

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