The iPhone X won't lead to a super cycle, as Apple reportedly cut supply orders 50%

The iPhone X won't lead to a super cycle, as Apple reportedly cut supply orders 50%
Apple has reportedly made the iPhone X production cuts official with suppliers on Monday, tips Nikkei, citing anonymous sources from the supply chain. Instead of the 40 million units that it had forecast will be needed in the January-March period, it seems that most early adopters have already jumped on the Animoji bandwagon, and the demand has now been adjusted to the much softer 20 million units pace. The report says that the iPhone X production cuts are due to rising inventories, as the TrueDepth camera components' supply bottleneck has been resolved, but it's still a 50% order cut, no matter how you slice it.

Nikkei is not the only source that claims subsiding iPhone X interest, as last week there were at least two research firm memos tipping the same thing, but today's report actually puts a number on the eventual production cuts. This might explain why Samsung's A3 OLED display factory won't be operating at capacity this month, after years of churning out mobile screens at full throttle - it is the shop that crafts the 5.8" panels for the iPhone X.

Apple is reporting its Q4 results this Thursday, and investors will be searching for any clue about these reported iPhone X production cuts when Apple issues its forecast for the current quarter. Analysts were expecting iPhone X to enter April with 63 million units sold behind its back, while now they are downgrading their estimates in the 51-57 million range. That is still in line with historical December-March declines of all iPhone sales of about 30%, after the initial demand peaks, but it's obviously not going to be the super-cycle upgrade that many were expecting, either.

As per reputed Apple analyst Toni Sacconaghi, who compiled a 2-page report on 45 Apple suppliers, nobody is completely sure how big the carnage might be in Q1:


If today's Nikkei report holds water, and Apple indeed forecasts much weaker Q1 this Thursday, point one in that quote is to bear fruit, and every supplier that manufactures parts exclusive to the iPhone X, is likely to feel the burn, unless its produce is also good for use in the upcoming iPhone Xs and Xs Plus, too.

source: Nikkei & Barron's

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35 Comments

1. bucky

Posts: 3774; Member since: Sep 30, 2009

I own an X and i love it, but i hope ALL of these companies get nailed this year. This kinda reminds of the video game industry in that they are seeing how far they can stretch the buyer before hitting the wall (i.e. loot boxes/dlc etc).

26. Furbal unregistered

Yeap, they can screw themselves with their ever-increasing MSRP's. Great analogy, particularly Apples fast charge solution. ~$1400 phone after tax/apple care and still would need to spend an additional ~$70 for official fast charging.

33. Vega007

Posts: 68; Member since: May 18, 2017

So you want them to get nailed yet you already contributed to them positively by purchasing the X? What the hell?

4. torr310

Posts: 1625; Member since: Oct 27, 2011

Becaue 3D Touch ID is superior to Face ID.

12. bucky

Posts: 3774; Member since: Sep 30, 2009

Right now I would say it is but it may not be that way in the next iteration of Face ID.

5. xfire99

Posts: 1205; Member since: Mar 14, 2012

1 month in 2018 and already Q1 report? Its Q4 report and not Q1!

9. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Companies go by their own fiscal quarters, not calendar quarters.

6. meanestgenius

Posts: 21453; Member since: May 28, 2014

I think the price and the omission of a finger print scanner were big turn offs to a lot people, IMO. I know for me, I went with the iPhone 8 Plus recently instead of the X because of the lack of a fingerprint scanner for something that’s not quite there yet, FaceID. The notch was a non-factor in my decision. The biggest thing that made choose the 8 Plus over the X was the battery life. Battery life is the number one factor for me when deciding which Smartphone to purchase. No fingerprint scanner, battery life and the price were probably among the top reasons for a lot of people when choosing which iPhone to purchase.

8. midan

Posts: 2574; Member since: Oct 09, 2017

As long as people buy iPhones Apple is happy, it doesn't have to be X

41. tntwit

Posts: 82; Member since: Sep 11, 2012

After 2 iPhones, I didn't go with the 8, even though I found one on Black inFriday for $300 off. It was too similar to the 6S Plus I already had (and was quite happy with). It might sound petty, but I was quite disappointed with the lack of optical stabilization on the second camera that the X has. I had no interest in the X because it it too small, too fragile and too expensive. The latest, greatest from Apple went from $650 to $700 for the 6, 6S, 7 and 8 and now the latest, greatest is $1000. That is a $300 increase. Make no mistake, the X replaces the non plus models. I moved back to Samsung with the Note 8 and am very happy. $350 off at Best Buy. I still think Apple does some things better, but there were too many trade offs and I really wanted the S Pen which I use daily and can't see moving away from. When Apple adds an on board Apple pencil to a larger X at prices Android charges, I'll consider switching back. Not holding my breath, but hoping the sales dip is a reality check for Apple. I don't want them to fail by any means, just to right size their pricing. However, if they are making money at this new price point, and it works for them, then I'll happily stick with what works for me.

42. meanestgenius

Posts: 21453; Member since: May 28, 2014

The Note 8 is a great smartphone. I owned one for a little while, but in all honesty, I'm not really much of an Android fan. Don't get me wrong, Android is a great OS, I'm just more of an iOS fan. Got an 8 Plus now and I'm loving it. I do agree with you about the Stylus support. Here's to hoping that Apple adds support for the Apple Pencil on a future iteration of the iPhone.

43. tntwit

Posts: 82; Member since: Sep 11, 2012

Despite repeated claims of iOS inferiority, I really did not find anything about Android that allowed me to do amazing things I could not with iPhone, at least for how I use it. I still think iOS is more refined and intuitive. Interestingly, as Android matures and becomes more refined, it seems it has inhibited more and more of the customization everyone praises it for. I guess that's the trade off. The appeal of the Note 8 was a large screen coupled with a dual optically stabilized camera that iPhone simply doesn't offer right now. Add the S Pen that I really wanted and really like along with a much better price and for me it was no contest. The Note 8 is Samsung's halo phone, like a Corvette or GT-40. They don't sell that many (relatively, at least I don't think), but it tends to be the Samsung phone that gets used for all the best of comparisons. It's somewhat of a niche phone and I'm not the typical customer. I always have, and will continue to recommend (to anyone who cares about my opinion) both iOS and Android, depending on needs and preferences. They are both great platforms.

14. palmguy

Posts: 962; Member since: Mar 22, 2011

The whole concept behind Apple's devices is a lifestyle image at high prices. Basically premium look at me electronic devices that work well. But this year I wonder. iOS 11 updates & securities software issues, slowdown gate(whatever you want to call it), & the $1,000 phone, Apple reality distortion field may be damaged.

19. Rigmaster

Posts: 234; Member since: Jan 22, 2018

Time will reveal the true sales and financial impact of Apple lowering sales estimates. The bottomline though is the basic history since iPhone 6/6+ has been: 1) 6/6+ - new design, significantly faster, bigger even on smallest phone (6), $650/750. 2) 6S/6S+ - same design, a little faster, touch sensitivity, $650/750. 3) 7/7+ - same design, a little faster, $650/770. 4) 8/8+ - same design, most iPhone X internals that matter, $700/800. 5) X - new design, new gestures, less screen size due to notch/incompatible apps, $1000. Basically, X may be new, but it's like being a beta-tester for software/UI/hardware all at the same time. The mistake is Apple not indicating that X is a transitional and limited-availability phone. I doubt Jobs would have allowed X to be released with so many issues. It's a question of Apple not realizing that they've fallen into the production world instead of staying in the innovator lane.

20. midan

Posts: 2574; Member since: Oct 09, 2017

"Another January, another misleading iPhone supply cuts story from Nikkei Everyone in the industry should know that "channel checks" of Apple suppliers offer largely worthless data. But every January, Japan's Nikkei newspaper unloads a report suggesting that Apple is scrambling to slash production of its newest iPhone because of disappointing sales. Every year that report has been false, and every year the tech media falls for it." http://appleinsider.com/articles/18/01/29/another-january-another-misleading-iphone-supply-cuts-story-from-nikkei people should really read this.

21. Back_from_beyond

Posts: 1195; Member since: Sep 04, 2015

There have been multiple stories from multiple sources claiming Apple has cut the supply, even the best Apple analyst has said so. Samsung has pretty much confirmed they their production of the iPhone X screens is on halt.

25. midan

Posts: 2574; Member since: Oct 09, 2017

Well let's wait the thursday, If this is true it will show in their q results and upcoming q prediction.

44. tntwit

Posts: 82; Member since: Sep 11, 2012

It'll be interesting if nothing else. I'm no economist, but I seem to recall a balancing point where the price delivers maximum profit for the company. Any higher and the profit per unit is higher, but they sell less with a lower overall profit, any lower and they sell more, but with less profit per unit and lower overall profit. Of course there are many other variables to disprove such theories, but the price went up $300 or 43%. Lower sales (at least for the X) shouldn't necessarily be a surprise, but far from a guarantee either. No doubt they have a loyal following, and there is a never ending supply of Apple doomsday articles. Personally, I think their pricing strategy is nuts, but Apple has clearly made crazy profits for several years now, so I'd gather they know what they are doing, far more than I do.

24. jphiller87

Posts: 92; Member since: Apr 23, 2015

Ignorance is bliss oops something must be wrong with my keyboard I meant iPhone users.

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