Tuesday , August 3 2021

Apple iPhone output boost. Why now?

Investors are cheering the news that Apple Inc is increasing the output for its next lineup of iPhones. While it may seem like a positive signal for future demand, reality is a bit more complicated.
Bloomberg News reported that Apple has told its suppliers to make as many as
90 million next-generation iPhones for its initial run, a figure that would be an increase of up to 20% over the prior year. According to the report, the Cupertino, California-based company is expected to introduce four models in September with designs similar to 2020’s phones and incremental feature upgrades — including a faster processor, better camera and improved displays.
But beyond a forecast for greater iPhone demand, there are other reasons Apple may be asking for more production. First, the most obvious one is calendar shift. Last year, the smartphone maker delayed the release of its iPhones from September to October, which compressed the period for sales into the end of the year. With the return of a more normal schedule, there will be an additional month to sell the new models this fall and holiday season, which requires more inventory. Second, Apple could also be managing its suppliers to guard against component shortages. The semiconductor industry’s chip shortages have already started hurting sales of Apple’s non-iPhone products. During the company’s last earnings call, executives projected chip shortages for iPads and Macs were going to reduce its June quarter revenue by $3 billion to $4 billion. Forcing suppliers to increase their manufacturing capacity would be a prudent way to minimise the possibility of shortages for the iPhone.
Frankly, the success of the 2021 lineup is far from assured. Apple’s annual iPhone launches tend to alternate every couple years between large feature upgrades that spur strong demand and small improvements with similar designs. After the introduction of the iPhone 12 last year — which was the first model to incorporate higher-speed 5G capabilities — this year’s updates will be minor in comparison.


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