Cutting corners: iPhone manufacturers are not able to make full use of their production capabilities and are closing down unneeded assembly lines.
With regards to the growing uncertainty caused by the US-China trade disputes, Tung said Pegatron, being a technology company with global deployments, does not see it necessary to relocate its production capacity completely out of China, noting that a 3% capacity relocation might be sufficient.
Pegatron is to deliver its fourth-quarter outlook at an investors conference scheduled on November 8. As a result, Apple has reportedly cancelled the production boost that it was likely to give after the smartphone hit the shelves.
The Nikkei, citing supply chain sources, said Apple had also asked smaller iPhone assembler Wistron Corp to stand by for rush orders, but that the company will receive no planned orders for the iPhone XR this season.
"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units", one source told Nikkei. It's possible, for instance, that overall iPhone demand is down and Apple is reducing its production costs.
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. Well, this could mean that people are choosing the cheaper iPhones rather than going for the iPhone XR, and this could put a massive dent in Apple's earnings next quarter (and this fits in with the conspiracy theory that Apple has stopped reporting on unit sales because it knows sales are soggy).
At the same time, however, Apple made major changes to its entire iPhone product line this year in a way it really hasn't before.
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