Apple Forced to Scale Back Production Targets for Vision Pro Headset Due to Manufacturing Challenges

Apple, known for its groundbreaking products, has encountered significant hurdles in the production of its highly anticipated mixed-reality Vision Pro headset. The company has been forced to make drastic cuts to its production forecasts, delaying the launch and pushing back plans for a more affordable version of the device. The complexities of the headset's design and manufacturing difficulties are the key reasons behind these setbacks, according to sources familiar with the matter.

Analysts and industry experts suggest that Apple's decision to delay the release of the $3,500 "spatial computing" headset until early next year is primarily driven by supply chain issues rather than allowing developers sufficient time to create compatible apps. Sources close to Apple and Luxshare, the Chinese contract manufacturer responsible for initial assembly, reveal that the company is preparing to produce fewer than 400,000 units in 2024. Furthermore, industry insiders indicate that Luxshare is currently the sole assembler of the Vision Pro headset.

These production projections represent a significant reduction from Apple's earlier internal sales target of 1 million units within the first year. Analysts believe that Apple's lack of confidence in scaling up production capabilities is reflected in these conservative forecasts, following a history of missed deadlines in launching the device.

Manufacturing the sleek screens for the Vision Pro headset poses one of the major challenges for Apple. The screens consist of two micro-OLED displays, one per eye, and an outward-facing curved "lenticular" lens. These advanced displays offer a resolution surpassing anything currently available in the market, while the lens projects the wearer's eyes to the outside world. Apple has expressed dissatisfaction with suppliers' productivity, particularly concerning the yield of defect-free micro-OLEDs, which are the most expensive component of the headset.

Jay Goldberg, founder of tech consultancy D/D Advisors, comments on the complexities of the Vision Pro headset, stating that it is the most complex consumer device ever made. Goldberg suggests that Apple anticipated production inefficiencies and priced the device at $3,500 to accommodate these challenges. He acknowledges that Apple will not likely generate profits from the device in its first year.

Apple is already looking ahead and working on subsequent generations of the headset, including a more affordable version targeting mass-market consumers. The company is collaborating with Korean display makers Samsung and LG on the development of the second-generation headset. Despite the setbacks, market intelligence group Canalys predicts that Apple will exceed a user base of 20 million within five years of the launch, with high demand expected from loyal fans and high-net-worth users.

The cut to production forecasts has been disappointing for Luxshare, which had been preparing its capacity to produce nearly 18 million units annually in the coming years. However, industry analysts suggest that the whole headset supply chain in Asia is not experiencing a significant boost from the Vision Pro. Manufacturers' confidence in the product's success remains low.

While Apple faces production challenges and delays, industry experts and analysts remain optimistic about the long-term potential of the Vision Pro headset. Despite the initial low production numbers, Canalys projects strong demand, especially from Apple's dedicated fan base and affluent consumers, with a forecast of 350,000 units in the first year and a user base exceeding 12.6 million units five years after launch.

By fLEXI tEAM