Various reports lately have indicated that Apple’s iPhone XS and iPhone XR models may not be selling as well as the Cupertino firm had hoped. The Wall Street Journal has joined the chorus, saying Apple has reduced orders for both models.
Lower-than-expected demand for Apple Inc.’s new iPhones and the company’s decision to offer more models have created turmoil along its supply chain and made it harder to predict the number of components and handsets it needs, people familiar with the situation say.
The report says Apple has slashed production of the affected handsets in recent weeks, frustrating executives and workers at Apple manufacturing and assembly partners. As one anonymous supplier tells WSJ, “Doing business with Apple is very risky as it often reverses what it has promised”.
Although the production cuts are frustrating to Apple’s partners, the company itself may not be hit as hard, as they are selling a higher proportion of older iPhone models, and also have a growing service service business which aids its growth. Although it appears Apple will be selling fewer units this quarter, its overall iPhone average selling price (ASP) is higher, meaning it needs to sell fewer iPhones to make the same amount of money.
The report claims that orders for the iPhone XR have been reduced by up to a third, while orders for the iPhone XS and iPhone XS Max have been reduced by a bit less. Apple stock has fallen this month, following reports from Apple suppliers that investors should expect lower-than-predicted sales numbers.
Apple will no longer report device unit sales as part of its quarterly financial reports, so it will be difficult to determine just how well iPhone sales have performed this quarter.