The general response to iPhone X, which was launched with much fanfare last year, indicates the latest version of Apple’s (AAPL) iconic smartphone brand turned out to be a damp squib. It was clearly evident from the initial sales performance that iPhone X was not as well-received as its predecessors.
There has been widespread speculation among market-watchers that the company would eventually stop production of the first generation of the seemingly botched gadget, most probably in the first half of this year.
An industry analyst in a note stated on Friday that Apple is not procuring components for iPhone X from its Taiwanese supplier anymore, which has forced the semiconductor company to cut down its guidance for the segment. It is learned that Taiwan Semiconductor Manufacturing (TSM) is struggling to deal with the piling up of inventory that was originally meant for iPhone X.
Worse, the inventory crisis faced by the chip supplier has a rippling effect on another company that provides 3-D sensing technology for iPhone X to recognize users’ face. The market value of the company, AMS, has taken a beating from lack of orders from Apple. Both companies recorded noticeable declines in revenue during their latest reporting periods.
The latest finding corroborates earlier reports that Apple is looking for ways to combat the slump in orders for its newest iPhone. While a potential solution is to lower the price, Apple is unlikely to go for a price cut as it is against its strategy.
Apple reportedly stopped procuring components for its iPhone X from a Taiwanese supplier
There is no doubt the tech giant has several options at its disposal to ride over the crisis – from a cheaper version to a more sophisticated iPhone that is devoid of all the glitches that earned iPhone X customers’ ire.
Meanwhile, Apple has a different take on the issue. The company cited a broad-based slump in smartphone market as the reason behind the lower-than-expected sales of iPhone X. This argument justifies the oversupply of chips, pointed out by Apple’s suppliers, to some extent.
Apple’s next earnings report, to be released in the first week of May, and CEO Tim Cook’s comments on the performance will be closely watched by customers and other stakeholders. Analysts are of the view that a drop in the sale of iPhone X would drag the company’s top-line significantly.
While not ruling out the possibility of replacing iPhone X, Apple maintained that it would do so because a better model is in the offing, not due to lack of demand.
The situation could give new perspectives to a widely asked question – are the smartphones that we use, especially the iPhone, worth their price? Maybe the answer lies in the dilemma encountered by the makers of the most popular smartphone in the world.
Apple shares opened sharply lower on Thursday and remained down throughout the session. The stock lost further in early trading on Friday.
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