Apple’s Vision Pro Woes

Apple Vision Pro, the much-awaited VR headset touted as the company's most important product release since the iPhone, was recently unveiled after seven years of development. Apple announced that the "spatial computing" headset, priced at $3,500, will not be available for sale until early next year, a considerable delay from its June 5 launch where 1 million units were promised before 2024. Analysts believe this delay is primarily due to supply chain issues rather than providing developers with ample time to create apps for the Vision Pro.

Manufacturing Malfunctions

Multiple industry sources have confirmed that Luxshare is currently the sole assembler for Apple's device. Additionally, two Chinese suppliers of specific components for the Vision Pro have stated that Apple has only requested enough supplies for 130,000 to 150,000 units in the first year.

These projections indicate a significant reduction in production compared to the initial target of 1 million units in the first 12 months. Analysts and industry experts interpret these low volume forecasts as a lack of confidence from Apple in scaling up production, following a history of missed deadlines in launching the device.

One of the significant challenges faced in production is the manufacturing of the device's sleek screens. These screens consist of two micro-OLED displays, one per eye, and an outward-facing curved "lenticular" lens. The internal displays offer a resolution surpassing anything currently available in the market, while the outward lens projects the wearer's eyes to the surrounding environment.

Jay Goldberg, founder of tech consultancy D/D Advisors, acknowledged that these challenges are part of the normal growing pains experienced in developing the most complex consumer device to date. He said, “There is a lot of technology in the Vision Pro and they knew it would take a while to scale up. The company knows they won’t make money on this in the first year.”

He also noted that the higher-than-expected price of $3,500 indicates that Apple accounted for production inefficiencies, knowing that manufacturing yields would be lower compared to its established product lineup. 

The reduction in 2024 production forecasts has disappointed Luxshare, which had prepared its capacity to assemble nearly 18 million units annually in the coming years, according to a source familiar with the company. Analysts have observed that the Vision Pro has not provided a substantial boost to the headset supply chain in Asia. Eddie Han, an analyst at Taiwan-based Isaiah Research, stated that Apple has not delivered a superior product as anticipated, leading to low confidence among manufacturers.

Wall Street analysts' predictions for Vision Pro sales vary widely, ranging from several hundred thousand to several million units in the first year. At the time of the headset's unveiling, Wedbush estimated that Apple would ship around 150,000 units in the first year, while Morgan Stanley projected approximately 850,000 units, and Goldman Sachs believed shipments could reach 5 million in 2024. For comparison, Apple sold 1.4 million iPhones in its first year on the market.

In the past as well, Apple has seen delays in manufacturing, with their Micro-LED displays in the Apple watch which caused manufacturing bottlenecks. This time they’re facing significant challenges with its mixed-reality Vision Pro headset due to the complexity of the headset’s design and production. Apple has had to revise their targets and delay the release of the product in Canada, UK and Asia.