Apple (AAPL.O) has been forced to make major cuts to production forecasts for its Vision Pro augmented-reality headset due to design complexities, the Financial Times reported on Monday, citing people with direct knowledge of the process.
The Vision Pro, launched last month and expected to be available early next year in the U.S., has a starting price of $3,499 – over three times the cost of the priciest headset in Meta’s (META.O) line of mixed and virtual reality devices.
The report said Chinese contract manufacturer Luxshare, Apple’s only assembler of the device, was preparing to make fewer than 400,000 units of Vision Pro in 2024.
That is below Apple’s earlier internal sales target of 1 million units in the first 12 months, according to the FT.
“Apple’s Vision Pro headset was already running up against challenges, given its high price point, and now it’s veered into another potential setback,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Streeter, however, added Apple has encountered post-launch problems before but recovered “spectacularly well” once products have been tested by users.
The FT said Apple has asked two China-based suppliers for enough components for 130,000 to 150,000 units in the first year, adding that plans for a more affordable version of the device have been pushed back.
A big difficulty in the production process is the manufacturing of the micro-OLED displays for the device, with Apple being unhappy with the yield of micro-OLEDs that are free of defects, the report said.
The production forecast cut also “disappointed” Luxshare, the FT reported, as it was set to increase its capacity to be able to build almost 18 million units annually in the coming years.
Shares of Apple were down 0.3%, after it became the first company to end a trading session above $3 trillion in market value on Friday.
