Apple’s highly anticipated $3,5000 “Vision Pro” mixed-reality headset is facing significant production challenges ahead of its scheduled launch early next year, according to a recent report.
The decision to scale back orders is not driven by concerns over the device’s high cost and user adoption, but rather by challenges in the complex design and production of the headset hardware.
During the recent WWDC event, Apple announced its plans to release the Vision Pro headsets to the public in early next year. However, there have been speculations about potential delays in the launch due to unresolved manufacturing and software development issues. The Financial Times report suggests that manufacturing is the primary bottleneck, specifically pointing to the production of the headset’s micro-OLED displays, which are supplied by Sony and TSMC. These cutting-edge components, along with others, are still relatively new, leading to low production yields.
Last week, Apple recently achieved a remarkable $3 trillion market valuation, reportedly had to make substantial reductions to its headset production targets. The cuts were necessary due to the challenges faced by key manufacturing partners in dealing with the intricate design of the headset.
The FT report draws information from various sources, including Luxshare, a Chinese IT products contract manufacturer that acquired the AR development team previously owned by Taiwan’s Pegatron. According to sources from both Apple and Luxshare, the initial sales target for 2024 was set at one million units. However, the revised projections indicate a more modest goal of shipping around 400,000 units in that year. Furthermore, secondary suppliers responsible for Vision Pro components have reportedly received smaller orders, enough to manufacture only 130,000 to 150,000 units in the first year.
Analysts’ predictions for the first year of Apple Vision Pro headset sales vary widely, with estimates ranging from 150,000 to 5 million units. Canalys, an IT-centric analyst firm, offers a more detailed forecast, projecting 350,000 headsets sold in 2024 and a user base of 20 million within five years of launch.
To meet Canalys’ optimistic estimates, production will need to scale up significantly in the coming years. Luxshare has been investing in building manufacturing facilities capable of producing nearly 18 million units annually. Additionally, the introduction of Apple’s second-generation headset, which reportedly uses displays from trusted suppliers Samsung and LG, may help overcome current production challenges. Once Samsung and LG are ready to supply Apple with the required displays, it is expected that production issues will be resolved, and Luxshare’s facilities will be fully utilised.
