Apple plans a 30% boost in iPhone production for the first half of 2021

TAIPEI – Apple plans to produce up to 96 million iPhones for the first half of 2021, up nearly 30% year-on-year after demand for its first-ever 5G handsets spiked during the pandemic, Nikkei Asia discovered.

The Cupertino-based technology giant has asked vendors to build about 95 million to 96 million iPhones, including the latest iPhone 12 range and the older iPhone 11 and iPhone SE, several people familiar with the matter told Nikkei Asia – although there were An industry-wide shortage of key components can threaten that target.

The preliminary full-year forecast that Apple shared with its suppliers suggests it plans to build up to 230 million iPhones, including both old and new models, by 2021, people said. This would mean a 20% increase from 2019, although the target will be regularly revised and revised in response to any changes in consumer demand, they added.

“Planned production for the next quarter and next quarter has been set and the outlook is pretty bright,” a director of a major Apple vendor told Nikkei. “The iPhone 12 Pro and iPhone 12 Pro Max are mainly stronger than we estimated, while the demand for iPhone 12 is in line with the forecast, but iPhone 12 mini is a bit slow,” the person added.

Apple recorded two consecutive years of declines in smartphones in 2018 and 2019. In the first nine months of this year, shipments amounted to about 116 million iPhones, just 1% less than a year ago, according to data from research firm IDC.

Much of that improvement came from the iPhone 12 series – Apple’s answer to the 5G smartphone offering from Samsung Electronics and Huawei Technologies – which has been in high demand since this quarter. The preliminary production plan for 2021 almost matches the record of 231.5 million iPhones shipped in 2015.

Apple is also preparing an aggressive production schedule for its high-end computers, including the MacBook Pro and iMac Pro, for 2021, two other people familiar with the matter say. The company is in the process of replacing Intel’s core processors in its computing setups with proprietary CPUs built with technology from British chip designer Arm. Apple has already introduced three MacBook models powered by the M1 central processor in late 2020 and announced that it will take about two years to fully switch to custom CPUs. The US tech giant is also working on a new Apple TV, a home entertainment device for video-on-demand services, for next year, one said.

Apple’s robust iPhone orders come as the smartphone industry faces two upheavals: a severe component shortage and fierce competition for Huawei’s market share.

Device manufacturers are rushing to secure enough critical components – particularly semiconductors and displays, which will take several months to manufacture – in anticipation of a boom in consumer demand following the coronavirus.

Apple has already acquired parts for iPads and reassigned them to the iPhone 12 range, a move that hit 2 million to 3 million iPads this year, Nikkei Asia reported.

Smartphone peer Xiaomi, meanwhile, has given suppliers a bold production target of 240 million smartphones for next year, which is likely to exacerbate shortages across the industry. Like its peers, Xiaomi is seeking to expand its footprint abroad as Huawei pulls out due to US sanctions.

During the pandemic, Apple tried to build as many processor chips as possible to avoid supply chain disruptions. Several market viewers, including CLSA and Jefferies, suggested that Apple had cut some orders for its A14 processor chips for the January-March period, although industry executives told Nikkei that this more likely reflects a “ seasonal adjustment ” and that overall demand for the former half of 2021 is still healthy.

“There are so many components that should go into iPhones, not just core processors,” said a chip industry manager. “Apple’s change indicates that they now have enough processors to meet their production plan, but are still looking for other necessary components.”

Vendors were initially concerned about the outlook for the 5G iPhone 12 range after the pandemic disrupted development and delayed launch by about a month. In April, when the global health crisis first hit the US, Apple even considered waiting until next year to reveal the lineup.

However, it has been warmly received: consumers in the US and China are currently facing waiting times of up to four weeks for some iPhone 12 Pro models.

Jeff Pu, an analyst at GF Securities, told Nikkei Asia that most vendors and market viewers foresee rosy demand for 2021, and iPhone shipments are “sure” to grow again next year. However, there are still uncertainties about the size of the benefit, the analyst said.

“The market is very optimistic about 2021, but we have to be a little bit cautious about whether it will be really that great, or just in line with everyone’s expectations. Apple’s iPhone shipping will definitely see a recovery next year, but overall it will not benefit as much from Huawei’s loss of market share as other players such as Samsung, Xiaomi and Oppo, ”said Pu. “We’re also a little conservative on the next new iPhone series, which will be released in the second half of 2021. We don’t see the excitement for the new model in 2021 after the first 5G iPhone series this year.”

Pu’s company predicts Apple will ship about 220 million iPhones next year.

Apple declined to comment on this story.

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