Sales of the pricey new iPhone X are reportedly much lower than Apple expected, so the company has slashed production volumes for the coming months.
Apple initially wanted 40 million iPhone X units produced by factories in China in the first three months of 2018, but following reports of weak sales at Christmas, that figure has been substantially reduced.
“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 Nikkei Asian Review reported Monday, quoting anonymous sources within Apple’s supply chain.
While Apple is said to be maintaining the level of production for the rest of its smartphone range, the production cuts for the iPhone X will have a significant impact on companies supplying components for the new phone, with the combined impact expected to run into billions of dollars.
The iPhone X features some cutting-edge technology, including an edge-to-edge display and facial recognition, but it was the phone’s high price tag of $999 that drew a lot of attention.
The Nikkei report comes just a day after well-placed analyst Ming-Chi Kuo reported that Apple would launch a new version of the iPhone later this year with a similar design to the X but with an LCD screen rather than an OLED display, which could help the company recover from “lower than expected” iPhone X sales.
The iPhone X is Apple’s first smartphone with an OLED (organic light-emitting diode) screen, and multiple reports suggest the company is having trouble producing the displays in large numbers.
Kuo last week suggested that Apple would stop production of the iPhone X completely this summer, ahead of the introduction of new models in the fall. While this is not unprecedented — Apple stopped production of the iPhone 5 after just one year — Apple does typically continue to sell older models at lower prices.
Apple has yet to reveal any sales figures for the redesigned iPhone X, which it announced in September but only went on sale in November. Apple is set to announce its results for the final three months of 2017 on Thursday, but it is unclear whether the company will break out the exact number of iPhone X models it sold compared to the rest of its smartphone range.