Apple Cancels Production Boost for Budget iPhone XR: Nikkei

(Bloomberg) -- Apple Inc. has told Foxconn and Pegatron to halt plans for additional production lines dedicated to iPhone XR, the Nikkei reports, citing unidentified people familiar with the matter.

Key Insights

• Apple’s lower-priced XR model was expected to be popular over the holiday season, luring owners of older iPhones to upgrade. It retains the key advances of the first iPhone X -- facial recognition and an edge-to-edge display -- but is cheaper while being noticeably larger at 6.1 inches.
• Foxconn is now using around 45 production lines for the iPhone XR model, compared with 60 it first prepared, meaning it would produce around 100,000 fewer units daily, down 20 to 25 percent from its original outlook, said Nikkei, citing one of the people.
• Pegatron XR production also isn’t reaching maximum capacity, and Wistron, a smaller iPhone assembler, won’t receive any orders for iPhone XR this holiday season. Apple has ordered around 5 million more units of iPhone 8 and iPhone 8 Plus from suppliers, raising the total order to 25 million units this quarter, said the Nikkei report.
• Apple didn’t respond to Nikkei’s request for comment. Foxconn, Pegatron and Wistron declined to comment.

Market Reaction

Apple shares were down just under 1 percent in pre-market trading in New York Monday.

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• Apple reported its fiscal forth quarter earnings late last week. Its shares had their worst day since 2014 on Friday, amid concerns that growth in its iPhone is slowing.
• Apple said it would stop providing unit sales for iPhones, iPads, and Macs in fiscal 2019.

To contact the reporters on this story: Crystal Chui in Zurich at tchui4@bloomberg.net;Anna Molin in Stockholm at amolin3@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Vidya Root

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