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There are reports that Apple has pulled back plans for a major iPhone XR capacity boost, with Foxconn and Pegatron planning to deploy fewer manufacturing lines for Apple's cheapest premium phone.

Apple's iPhone XR was the third model the company unveiled in September.

"If the reports are accurate, we do find it somewhat disturbing that this would take place so early after the launch of the iPhone XR", Angelo Zino, an analyst at CFRA, said of the Nikkei report.

"Suppliers of iPhone 8 and iPhone 8 Plus are getting a combined order of around 5 million more units", one source told Nikkei. According to Nikkei, this means that Foxconn will be producing almost 100,000 units less every day based on the new forecasts available.

Both Foxconn and Pegatron are used by Apple to assemble its smartphones, alongside Wistron. The two firms assemble the iPhones. Apple has also asked smaller iPhone assembler Wistron to be on standby for rush orders. However, it is now using only around 45 lines and does not require any additional production capacity.

Nikkei writes that the lack of innovation is hurting Apple.

Shares of Apple's suppliers across Asia were hit on Tuesday after the company suggested it would miss earnings targets. However, it could also mean that the $100 price cut that the iPhone 8 got at the iPhone XS/iPhone XR launch is encouraging a low-end (well, the "starting at $600 end" of the market) to upgrade their old iPhones. It's possible, for instance, that overall iPhone demand is down and Apple is reducing its production costs.

Apple shares fell almost 4 per cent after the report, which fueled concerns that the iPhone XR, the cheapest of three iPhones Apple unveiled in September, was facing weak demand just days after it hit shelves. According to the report, demand is still strong for those models and Apple not expects to produce 25 million iPhone 8 and iPhone 8 Plus units during the fourth quarter.

Ives reaffirmed his $310 price target for Apple's stock, representing more than 50% upside to the current stock price.


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