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06 November 2018, 11:09 | Casey Mitchell
The iPhone XR may not be selling as well as Apple hoped. Ian Knighton CNET
Pegatron has already solved the issue of labor shortage at its plants in China and has made prompt shipments allowing its major brand client to start delievering its new smartphone models in late October, according to company chairman TH Tung.
Throwing some cold water on that idea is a new report from Nikkei which claims that Apple is reducing iPhone XR production due to lower than anticipated demand.
Though he did not disclose the names of the new products or the client, Tung was obviously referring to the new iPhone devices, according to industry sources.
This move has signaled disappointing demand for the XR, as Apple told Foxconn and Pegatron to halt plans for additional production lines dedicated to it.
Meanwhile, Pegatron, which is another key partner of the Cupertino-based tech giant, has had to "suspend plans to ramp up production", now "awaiting further instructions", according to supply chain sources that are typically right about these things.
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.
Tied to this is the unexpected news that demand of the previous-generation iPhone 8, which Apple still sells, has jumped. That's down 20% to 25% compared to Apple's most optimistic prognosis.
"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units", Nikkei report quotes a source as saying.
Apple's iPhone XR, which boasts the iPhone X's edge-to-edge display, albeit using older LCD pixels instead of the X's high-resolution OLED screen, was widely expected to fuel a massive wave of upgrades from users of the iPhone 6S or earlier models.
The analyst predicts the company's Services business, which includes its App Store, Apple Music, and Apple Pay offerings, will grow 20% annually and rise more than $50 billion in sales by fiscal 2020.
This information may help explain why Apple provided a dim forecast for iPhone sales in the current quarter.
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