Apple Inc is slashing production targets for its Vision Pro because manufacturers are struggling with the novel gadget’s complex design, the Financial Times reported.
Apple is preparing to make fewer than 400,000 units of the US$3,499 headset for next year, it said, citing unidentified people close to Apple and Luxshare Precision Industry Co (立訊精密), the Chinese firm that is initially assembling the device.
Two China-based suppliers of components said that Apple was only asking for enough parts for 130,000 to 150,000 units in the first year, while plans for a cheaper version have been pushed back, the newspaper reported.
Photo: AFP
The Vision Pro, unveiled last month, is Apple’s latest move to sustain sales momentum and try to propel a mixed-reality industry that for years has struggled to make it into the mainstream. The device, which resembles high-tech ski goggles, is slated to arrive early next year in the US, followed by other regions later.
The new projections are down sharply from a previous internal sales target of 1 million units in the first 12 months, the Financial Times said.
A major hurdle is the creation of high-resolution inward displays, while projecting the wearer’s eyes to the outside world, the paper said.
Apple is also working on a more affordable version of the headset with South Korean display makers, the paper said, citing two people with direct knowledge.
The iPhone maker made Wall Street history after its market value climbed past US$3 trillion, as investors continued to pile into big tech firms.
The massive rally in Apple’s shares is forcing some fund managers to revisit a thorny dilemma: They might not own enough of the stock.
Apple’s share price has soared 49 percent so far this year. The company’s weighting in the S&P 500 has swelled to 7.6 percent, the biggest of any one stock in the history of the benchmark index, S&P Dow Jones Indices showed.
That hefty weighting means moves in Apple’s shares have an outsized influence on index performance. Yet many investors hold allocations of Apple that are smaller than its relative weighting in indices, whether it is due to the desire for portfolio flexibility, worries over owning too much of any one position and limitations imposed by the rules of their own funds.
If shares of Apple keep rallying, that could hurt the results of active fund managers, who strive to beat indices such as the S&P 500 or Russell 1000.
The issue has taken on additional urgency this year, as the market’s gains are being led primarily by a handful of megacap companies such as Apple, Microsoft Corp and Nvidia Corp, whose shares have outperformed.
“If you’re an active manager, one of the issues is it’s hard to own that much of one name. You are taking on more and more risk,” said Todd Sohn, technical strategist at Strategas Asset Management. “Because they are such heavy weights within the benchmarks, it becomes really challenging to outperform.”
Additional reporting by Reuters
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