Η Japan Display, which supplies Apple with screens for iPhones, is cutting production of LCD screens from December for the model iPhone XR due to the disappointing sales (compared to forecasts) of the phone after its debut in October.
The reduction in the production of LCD screens is expected to be about 30% compared to the highest level in November. This also marks a possible setback for the company, which expected that the contract for the supply of screens for iPhone XR is the key to eliminating a four-year losing streak.
For Japan Display, about 80% of its total revenue comes from the production of screens for smartphones. The majority of this revenue depends on its business partnership with Apple.
Earlier this year, the company, known as JDI, announced that it expects sales to increase by 10% to 20%. However, last month, the company reduced these figures to 5% to 15% for the fiscal year ending March 2019. It also downgraded its profit margin estimate.
According to reports, domestic factories have already reduced the production of display panels for the iPhone XR. In addition, The reports add that the company will stop production for about 10 days during the New Year holidays.
The company's panel stocks are expected to be at high levels after the full production rate in October and November. The company will now use part of the capacity released from this month's production cuts for products other than smartphones.
Apple has embarked on a more aggressive marketing strategy for its new iPhone models due to weaker sales. The company's stocks are also being traded for the current year, as Apple suppliers report orders across the industry and investors fear that demand for the iPhone XS and iPhone XR is low. The company will report sales results for the iPhone quarter in January, but Apple has already announced that it will no longer report the number of devices sold.
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