Apple is reportedly scaling back its production plans for the $3,499 Vision Pro mixed reality headset due to production difficulties and complex design. The company is concerned about its ability to meet the internal sales target of 1 million units in 2024. The production issues have also delayed plans for a cheaper version of the headset. Sources suggest that Apple expects to make less than 400,000 units in 2024, significantly lower than the initial target. The manufacturing of the micro-OLED displays and outward-facing lens is a major challenge, with Apple expressing dissatisfaction with suppliers' productivity and the number of defect-free displays. Despite these hurdles, analysts predict a user base of over 20 million for the Apple Vision Pro five years after launch.
Apple has reportedly scaled back its production plans for the Vision Pro augmented-reality headset due to design complexities, with Chinese contract manufacturer Luxshare expected to produce fewer than 400,000 units in 2024, below Apple's earlier sales target of 1 million units. The high price point and difficulties in manufacturing micro-OLED displays have posed challenges for the device. Apple has asked two China-based suppliers for enough components for 130,000 to 150,000 units in the first year, and plans for a more affordable version have been delayed.
Apple is expected to give Luxshare key iPhone 16 production responsibilities, taking away from Foxconn for the first time. Luxshare has already been given new product introduction approval for next year's iPhone 16 Pro Max, indicating Apple's increasing faith in and reliance on the assembler. Luxshare's production yield improvement schedule for the iPhone 14 Pro Max proved better than expected, leading Apple to award NPI to the company for the 2024 model. Apple wants to triple its iPhone production capacity in India within the next two years, as part of a larger plan to diversify its supply chain out of China and into other parts of the world.
Foxconn will lose exclusivity for assembling the iPhone 16 Pro Max, with all orders going to Luxshare starting in 2024, according to analyst Ming-Chi Kuo. Apple reportedly wants to minimize risk after Foxconn's Zhengzhou factory incident. Luxshare is already a secondary assembling partner for Apple's iPhone 15 Pro and iPhone 15 Pro Max. Foxconn has still received the NPI for the iPhone 16 Pro and regular iPhone 16, while Pegatron has received it for the iPhone 16 Plus. Luxshare will reportedly ship between 45-50 million iPhones in 2023.
