Apple has reportedly announced some disappointing information to its suppliers, according to the Nikkei journal on Monday.
Due to an unexpected decline in holiday sales in 2017, Apple informed suppliers that the company will reduce its production target for the iPhone X.
When the iPhone X was released in November 2017, Apple forecasted 40 million units for a production target that was expected to kick off an increase in sales for the U.S. tech giant. Instead, with sales that were significantly lower than expected, the company will now be reducing the target to 20 million units for the first 2018 quarter. The decrease in sales was in key markets for Apple such as Europe, China, and the United States.
The iPhone X is considered to be the most expensive model to date with a price tag of $999 for the 64-gigabytes that some consumers are willingly paying, but not enough to sustain the three-month period which included year-end holiday shopping. The 256-gigabyte model sells for $1,149. The smartphone is the first of its kind for Apple that includes an organic light-emitting diode display. It also has 3D facial recognition as well as wireless charging. Unfortunately for the company, the enhanced features have not been enough to entice the projected sales.
The iPhone X had already gotten off to a rocky start when it was initially launched. Production was delayed due to a critical component needed for the new model. The OLED display panels are being manufactured by Samsung Electronics. The South Korean company was exclusively chosen due to being the only manufacturer that is able to produce a reliable supply for Apple. The 3D sensors for the facial recognition as well as the edge-to-edge 5.8-inch OLED display panels are highly technical and difficult to manufacture.
Analysts warn Apple not to reduce the price of iPhone X because that could affect sales of the company’s mid-range models that have sustainable sales in the market. The production of iPhone 8, iPhone 8 Plus and iPhone 7 are steady at 30 million units in the first quarter of 2018. Apple has not announced any changes within the production since the iPhone X was unveiled in November.
The stock of Apple fell 2.4 percent during the final quarter of 2017 although the Dow Jones Industrial Average has sustained new highs in the same period. Production shipments of the iPhone X are expected to be lowered from January until June 2018.