Setback For Apple as It Reportedly Cuts Production of Vision Pro Headset

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  • Apple is cutting back on the production of the Apple Vision Pro headset it introduced on June 5 at the Worldwide Developers Conference 2023.
  • FT noted that the design complexity and, more importantly, lower supplier productivity pertaining to 4K micro-OLED displays and lenticular lens is why Apple has reportedly changed its stance to bearish sales.

It would seem Apple was premature in launching its foray into the mixed reality (MR) space. Reportedly, the company is cutting back on the production of the Apple Vision Pro headset it introduced on June 5 at the Worldwide Developers Conference (WWDC) 2023.

According to Financial Times (FT), Apple will contract Luxshare to assemble fewer than 400,000 Apple Vision Pro devices in 2024. FT reported that two China-based individual component suppliers were handed orders for 130,000 to 150,000 devices.

Slated to go on sale early in 2024, the longer-than-usual gap between the product launch and roll-out reflected certain constraints in the hardware supply chain. For instance, according to The Elec, Sony, which is supplying the OLED-on-silicon panel to Apple for the Apple Vision Pro, refused to increase production from 100,000 to 200,000 units per quarter next year.

FT noted that the design complexity and, more importantly, lower supplier productivity pertaining to 4K micro-OLED displays and lenticular lens is why Apple has reportedly changed its stance to bearish sales.

It should be noted that the $3,500 price tag for the spatial computing device is based on the original internal sales target of one million devices being sold. Electronic devices tend to be cheaper once production is scaled up. So, would factoring in the production cutback to 400,000, a 60% decline from one million devices in the first year, impact the already higher price point?

It is unlikely that Apple’s production cutback is based on the market losing confidence in the device for two reasons: 1. the market doesn’t entirely know what the premium-priced device does (although this swings both ways), and 2. expert approvals had propelled the importance of the new product at par with the iPhone when it was launched.

See More: WWDC 2023: All the Shiny New Hardware From Apple This Year

Nevertheless, the $3,500 device doesn’t have a mass appeal; hence Apple is developing a non-pro MR device. It is unclear how the cutback would impact Apple’s go-to-market strategy for the cheaper, non-pro MR headset model, expected to be available by the end of 2025. Will Apple resort to using the mini-LED screen or persist with the Vision Pro’s micro-LED?

Apple Vision Pro is the latest addition to its expanding hardware and software ecosystem, which includes iPhones, iPads, Macs, Apple Watches, Apple TV+, iCloud, Apple Music, iMessage, Apple Pay, and more.

On Friday, Apple ascended to and closed above $3 trillion in market capitalization, making it the first company to do so. The Cupertino-based company’s revenue and profits were $394.32 billion and $94.68 billion, respectively, for fiscal year 2022 (six months ended September 2023) and $211.99 billion and $54.15 billion, respectively, for FY 2023 (six months ended April 2023).

Apple is expected to top $400 billion in revenue and $100 billion in profits in the current fiscal year.

Is the Apple Vision Pro marketable at $3,500? Share your thoughts with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!

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