Production of the iPhone X will be cut by half from the 40 million units planned for the first three months of 2018, a report claims.
Nikkei Asia reported that Apple had told its suppliers about the decision to cut production down to about 20 million units.
It said the cut was due to lower than expected sales during the end of year shopping period in Europe, the US and China.
The iPhone X was launched in November 2017 with much fanfare as the special model to mark the 10th anniversary of the device.
{loadposition sam08}The lack of sales have been put down to the price of the device, which costs nearly US$1000 in the US. In Australia, the price is closer to $2000.
The iPhone X was Apple's first to use an OLED display and the poor sales could mean the use of this type of display could be delayed in other models.
Supply delays of components mean that the company had a fight on its hands to keep up with demand during the period after launch, Nikkei said. Thereafter, as supply built up, the company had to cut production to prevent stock build-up.
The high price of the iPhone X is mainly due to the cost of the OLED display which comes from Samsung.
The report said that Apple would keep producing about 30 million units per quarter for its other new models, the iPhone 8 and 8 Plus.
The reduction in production of the iPhone X is expected to have a domino effect on manufacturers and the total impact is expected to be in the billions for the first calendar quarter of 2018.
Nikkei cited the example of Murata Manufacturing which had been making MetroCirc circuit boards which are needed to make the phones thin. Production would be cut due to the lack of sales, it said.
The cut in iPhone X production is also expected to impact on Sony's camera sensors, Kyocera's circuit boards and TDK's batteries.
Apple is due to announce quarterly results for the October to December 2017 period on Thursday.