Apple has partnered with Chinese suppliers for the production of its Vision Pro mixed-reality headset, according to the South China Post which also pegs Luxshare , a supplier to Apple for mobile products and accessories, as having been chosen to assemble the Vision Pro. If that is the case, this would be the first time Luxshare is involved in building the first-generation of any Apple product.
Alongside Luxshare, six other mainland Chinese companies, including camera module maker Cowell E Holdings and battery supplier Shenzhen Desay Battery Technology, are part of Apple’s supply chain for the Vision Pro. Taiwanese suppliers also play a significant role, with eleven Taiwanese companies involved, such as Largan Precision and TTSMC. The participation of both Chinese and Taiwanese suppliers reflects Apple’s confidence in the electronics manufacturing supply network in the region. The estimated cost of components used in the Vision Pro headset is approximately broken down below by WellnessXR, and it comes in at less than half of its retail price of $3,499.
This BoM for the Vision Pro has quite a few issues starting with the cost of the R1 chipset. We really don’t know how much has gone into developing this custom silicon, and what the long-term plan for it is at Apple Silicon, but it certainly can’t be expected to be coming at anything less than a premium price, and how do you factor the development and software costs into the chip price. Secondly, the BoM may be underestimating the total cost of the packaging and headband for the Vision Pro because it feels like Apple over-engineered the materials and head support for its device by a significant amount. And, again, we really have to weigh the cost of the software for the Vision Pro because it is a standalone computer, and while it may integrated with Apple’s other platforms, it still stands alone.
What Display Daily Thinks
The manufacturing, BOM, and costing for the Vision Pro will change between now and when it ships. Most everything that Apple has done to prepare the product for its launch at WWDC 2023 has to be seen through the prism of the pressures the company was under to deliver on the promise and expectations of the so-called iPhone moment. If you believe that the margins on the Vision Pro are roughly in line with Apple’s margins on its higher end laptops then the above BoM costs would make sense, but it is likely to be 10-30% more in real terms.
The Vision Pro is over engineered to meet the demands of the public demo and there are about 6 months left before the company has a final production build, assuming it is even the first quarter of 2024 and not pushed back further. So, it boils down to who Apple can squeeze in the supply chain . Where it gets difficult for Apple is with companies that don’t necessarily need to meet Apple’s demands: Sony is baulking at dropping prices or trying to meet production quotas set by Apple, which seems to think it will sell a million units to sell in 2024 but is expected by most analysts to be looking at anywhere from 200-500,000 units. In Sony’s case, it doesn’t really do its OEMs any favors, even one as big as Apple, and Sony probably don’t see the longer term upside for itself, especially if this is a transition product for Apple and the company has a cheaper, consumer version planned already.
