Apple has encountered manufacturing difficulties in China, leading to a significant reduction in production for its flagship augmented reality (AR) headset, the Vision Pro, according to reports. The tech giant is now expected to produce fewer than 400,000 units next year, down from previous estimates of around 1 million. The drop in production is attributed to the complexity involved in manufacturing the next-generation headset, posing a setback to Apple CEO Tim Cook’s plans for a major product launch.

Apple had previously announced that the Vision Pro would not be available for sale until 2024, making it an unusually long gap between product announcement and public release. Additionally, the headset will initially be released exclusively in the United States. The Vision Pro is designed to project holographic versions of apps into the wearer’s real-world view, offering features like virtual televisions and multiple computer screens.

The AR headset market has seen different strategies from tech companies, with Apple prioritizing quality over affordability. In contrast, Meta (formerly Facebook) has focused on selling cheaper headsets to target the mass market. The Vision Pro’s production challenges reportedly stem from the need for advanced high-definition screens, which have not been manufactured at scale before. Apple has faced difficulties in securing suppliers, with one indicating a request for components for only 130,000 to 150,000 devices.

Despite the setback, Apple, the world’s most valuable company, reached a $3 trillion valuation for the second time recently. However, the Vision Pro’s high price is not expected to have an immediate financial impact on Apple, especially when compared to the annual sales of iPhones, which surpass $200 billion.

Apple has not provided an official comment on the matter. As the production challenges persist, the company is expected to explore manufacturing lower-cost versions of the Vision Pro in the future, as the price of advanced components decreases.