Apple cancels iPhone XR production boost due to low demand

Apple has canceled the additional production lines for its budget iPhone XR meant to cover the original expected demands for the phone, reported the Nikkei Asian Review.

The $749 model is Apple's budget iPhone, and at a few hundred dollars cheaper than the flagship XS and XS Max was meant to stir consumer interest among more cost-conscious buyers.

But instead of catching the eye of those buyers, it's last year's iPhone 8 and 8 Plus that have seen demand growth. Apple has ordered 5 million more iPhone 8 and 8 Plus units this quarter, bringing the total to 25 million. (READ: With iPhone XR, Apple says goodbye to bezels, legacy design)

The iPhone XR, meanwhile, is having its demand outlook cut by around 20% to 25%, according to the Nikkei source. The decrease translates to 100,000 fewer units daily from Taiwanese supplier Foxconn, and likely, similar cuts at another Taiwanese supplier, Pegatron. The two firms assemble the iPhones.

A smaller third assembler, Wistron, originally tapped to be on standby for rush demands, will also reportedly not receive rush orders this season. At Foxconn, only 45 production lines of the planned 60 are currently being used.

Nikkei writes that the lack of innovation is hurting Apple. "The moves to add orders for year-old iPhone models while suspending extra production for the latest product illustrates Apple's lack of innovation and inability to energize consumers with such a pricing strategy. Last year, Apple gave rush orders for the iPhone 7 series following the launches of the iPhone 8 series and premium iPhone X," the Japanese financial newspaper said.

A quickly maturing smartphone market may also be to blame as worldwide shipments declined for the first time in 2017 and are expected to decline this year as well.

Rising competition from China's Huawei has also been chipping away at Apple, with these smartphone giants flip-flopping at the global No. 2 spot. And for two straight quarters this year, Huawei has grabbed the spot away from Apple, recently launching the Huawei Mate 20 phones.

In the Philippines, Huawei reported that the Mate 20 series is enjoying brisk sales, reaching P100 million in sales on its first day in the market.