Apple suppliers will be lowering component manufacturing for iPhone X, iPhone 8 and iPhone 8 Plus in the first quarter of this year following the peak holiday season. Via Digitimes, lower orders are mostly from seasonality trends but some sources noted that iPhone 8 and iPhone 8 sales have not been as strong as expected and are ‘dragging down’ iPhone X momentum in terms of overall iPhone production.

iPhone 8 component orders apparently began falling off during the final months of 2017 which is unusual for flagship iPhone sales. However, even Apple admitted on its last earnings call that it doesn’t really know how customers would react to a three flagship iPhone product mix, so comparisons to expectations may not be significant.

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If you believe iPhone X is cannibalizing sales of the iPhone 8 and iPhone 8 Plus, rather than customers switching to other company’s phone models, it’s not really a bad thing for Apple either. The same customers have essentially been up-sold into spending ~30% more on their iPhone devices.

AAPL stock is down 1% in premarket trading today on the news.

We’ll have to wait for the Apple earnings call on February 1st to know exactly how many iPhones Apple sold. Analysts believe that the company will sell more than 80 million iPhones in the period, and more than 100 million iOS devices overall.

Apple does not typically reveal the breakdown of the mix, so we might still be in the dark about how many of those 80 million were sales of iPhone X versus iPhone 8 (or even iPhone 7 and other models), but we will know average iPhone selling price. ASP gives some insight into the relative weighting of which models were most popular.

The downtick in iPhone sales will lead some suppliers to shut down production lines temporarily in February to prevent inventories from growing too much, until order visibility improves. Digitimes says suppliers for memory chips, circuit boards, 3D models and other firms are all reporting the same lower levels for iPhone orders.


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