According to media reports, owing to the slower-than-expected sales in holiday season in key markets, such as the US, China and Europe, Apple plans to halve its production for the iPhone X for three months, starting from January.
The Cupertino-based tech giant has notified suppliers including Samsung and Sony that it has decided to reduce the target to around 20 million units from 40 million units that was expected during the beginning of sales in November.
Apple iPhone X is the most ambitious phone by the company. It is also the first phone by the company to have OLED display and Face ID feature. One of the reasons that the device failed to perform as expected is its higher-than-expected price ($999 and above).
Earlier this month, acclaimed KGI Securities’ analyst Ming-Chi Kuo said that Apple will reportedly cease production of its newest iPhone X in the second half of 2018. And while Apple is likely to ship approximately around 20 million units of the iPhone X in the first quarter of 2018, Kuo says that big screen phones are still popular in China, and the notched design of the iPhone X makes it seem to have less usable screen space as compared to the iPhone 8 Plus.
Kuo further emphasised that Apple will witness a five per cent growth in the first half of 2018 from iPhone 8, iPhone 8 Plus, iPhone X.
Apple will see 10 per cent growth by the year end, as the iPhone X will be replaced by a second generation 5.8-inch iPhone X, a 6.5-inch iPhone X Plus and a 6.1-inch iPhone SE 2 (priced between $650 and 750) with Face ID. Apple is also in talks with LG to secure approximately 15 – 16 million OLED panels for its next iPhone. Currently, Samsung Display provides Apple with nearly 10 million OLED panels per month for iPhone X.
According to Counterpoint research, with a maximum per unit profit of $151, Cupertino-based Apple has earned five times more per unit profit than Samsung and approximately 14 times more than the average per unit profit of Chinese brands in the third quarter of 2017.
Apple captured nearly 60 per cent of the total profits generated in the mobile handset segment followed by Samsung. Apple’s year-on-year profit share declined by 30 per cent mainly due to an increased mix of previous generation iPhones. The average selling price of an iPhone remained flat year-on-year while the shipments increased three per cent year-on-year.