Apple Likely Significantly Reduces Production Scale of 'Vision Pro' Due to Supply Chain Issues

"From a target of 1 million units down to 130,000~400,000 units"
"Display yield dissatisfaction"... Rumors of 2nd generation development start

Apple is reportedly significantly reducing the production volume of its mixed reality (MR) headset 'Vision Pro,' which it ambitiously unveiled last month, to less than half of the original target. With a pricey tag of around 5 million won and the possibility of a commercial failure, combined with supply chain issues, there are forecasts that production will face setbacks.

[Image source=Reuters Yonhap News]

A major British foreign media outlet cited multiple sources on the 2nd (local time), reporting that Apple had set an internal goal to sell 1 million units within the first 12 months after the Vision Pro launch but recently appears to have lowered this target.

According to the report, a source within Luxshare, Apple's key partner in China, stated that they are preparing to produce about 400,000 units of the Vision Pro in 2024. Luxshare is currently said to be the sole assembler of the Vision Pro. Another Chinese Vision Pro parts supplier reportedly conveyed that Apple intends to produce around 130,000 to 150,000 units in the first year of the Vision Pro's release.

Earlier, Apple first unveiled the Vision Pro on the 5th of last month. While Apple revealed a prototype Vision Pro on that day, it announced that sales to the general public would begin early next year. The market interpreted this not as Apple securing time for developing applications (apps) for the Vision Pro but as an indication of supply chain issues related to production.

In particular, Apple is reportedly facing difficulties in the production process of the micro organic light-emitting diode (OLED) display installed in the Vision Pro. The micro OLED display, first publicly revealed in June and installed in the Vision Pro, was supplied by Japan's Sony and Taiwan's TSMC, but Apple is said to be unsatisfied with the current yield rates.

Jay Goldberg, founder of the technology consulting firm D/D Advisor, commented, "Most of this is normal growing pains," and described the Vision Pro as "the most complex consumer electronic device ever made." He added, "Apple knows that a lot of technology is involved in the Vision Pro, and because of that, it will take some time to move to mass production," and "Apple is aware that it will not make money in the first year of sales."

[Image source=AP Yonhap News]

Sony, which is actually involved in display production, is also cautious about expanding the production volume of related parts. Terushi Shimizu, head of Sony's semiconductor division, recently said at an event, "We will watch how much demand for micro OLED displays increases," adding, "However, I don't expect production to be aggressive like with image sensors."

The Vision Pro is a new product released by Apple nine years after the Apple Watch was first unveiled in 2014, and it attracted attention as developers reportedly spent over seven years developing it. However, with a device price of $3,500 (approximately 4.6 million won), the market has evaluated its commercial prospects as uncertain.

Meta Platforms, which entered the headset market earlier, released the virtual reality (VR) headsets Quest 2 and Quest Pro in October last year at prices of $499.99 and $1,499.99, respectively, and has since lowered prices. Recently, Meta also announced a subscription service allowing use of its VR headsets for $8 per month. This is interpreted as a strategy to capture the market based on affordable prices before Apple releases its headset.

Considering these factors, Apple is reportedly already working on developing a next-generation headset with a relatively lower price. The second generation of the Vision Pro is said to be collaborating with domestic display companies such as Samsung Display and LG Display. To reduce the headset price, Apple is also exploring integrating other display technologies like mini LED instead of micro OLED displays, but it is said that Apple still intends to use micro OLED displays even in non-Pro headsets.

Mark Gurman, an Apple specialist reporter for Bloomberg, recently reported that Apple is developing two versions of the Vision Pro 2nd generation: a high-end and a low-end model.

It remains to be seen how these reports will affect Apple's stock price, which has been on the rise recently. Apple closed at $193.97 on the 30th of last month, up 2.31% from the previous day. On the same day, Apple surpassed a market capitalization of $3 trillion for the first time based on the closing price. Some in the market have even projected that Apple's market cap could reach $4 trillion.