Sources with knowledge of two of the touch module suppliers for the iPhone XR say the companies expect to see a slowdown in shipments in the first quarter of 2019.
The two companies are TPK Holding and General Interface Solution (GIS), both of whom have worked with Apple for several years. It feeds into concerns that the iPhone XR is experiencing weaker-than-expected sales. Things might not be quite what they seem, however.
Both TPK and GIS recorded strong sales for October, apparently driven by the iPhone XR. They expect to see the same in November and December, but they expect things to fall off early next year. No exact numbers are given in the report.
The two companies invested heavily in equipment upgrades to be able to provide Apple with the laminated out-cell touch modules it requires for the iPhone XR. For instance, GIS supposedly spent in the realm of $120 million to ramp up its lamination capacity.
A hit or a miss?
The iPhone XR may be one of the best iPhones Apple has ever created, but recently it has been hit by reports of lower-than-expected sales. Foxconn and Pegatron have reportedly halted plans for dedicated iPhone XR production lines. Apple analyst Ming-chi Kuo has also slashed his projections for shipments from 100 million to 70 million during the phone’s product lifecycle.
While Kuo has a generally strong tracking record, it’s still worth taking these warnings with a pinch of salt. This week, technology analyst Ben Bajarin warned that, “trying to gain insight into Apple’s supply chain for signals is a fool’s errand.”
That’s because Apple buys certain components in bulk and from multiple companies. This means that looking at one or two companies and trying to draw conclusions about demand isn’t always straightforward. Last year, many analysts predicted that the iPhone XR was a massive flop, only to have to eat crow when Apple reported record sales.
Realistically, the days of crazy iPhone numbers growth are probably coming to an end — which is why Apple is now focused on average sale price rather than bragging about how many iPhones it sells. Apple also doesn’t report the ration breakdown of its different iPhone model sales.