Apple intends to increase iPhone production by 30 percent year-over-year in the first half of 2021, reports Nikkei Asia. The Big Tech firm tasked its suppliers and assemblers with making 95 million to 96 million units next year. The company is ramping up its smartphone output to meet unexpectedly high demand for its recently launched 5G-compatible lineup.
However, the corporation’s plans to capitalize on renewed consumer interest in its hardware might be undercut by a global electronic components shortage.
Apple Wants to Increase iPhone Production
In 2018 and 2019, Apple recorded declines in worldwide shipments of its flagship mobile device. However, the firm reversed that downward trend this year thanks to the release of its SE and 12 model iPhones. The company’s budget and 5G-enabled handset launches successfully appealed to reluctant upgraders and new first-time buyers.
The smartphone manufacturer intends to expand its revenue by considerably increasing its mobile device output in 2021.
According to Nikkei Asia, Apple told its suppliers it wants to make around 230 million handsets in total next year. If successful, the company will make its largest amount of iPhones since 2015. The firm’s strategy involves keeping its latest offerings in stock and launching a new iPhone in late 2021.
By increasing its global user base, the corporation will advance its goal of improving its services revenue. The firm signaled its intention to grow that part of its business this year by introducing a new data-driven subscription fitness program. It also began offering a discount bundle for its music, TV, games, news, and cloud storage platforms.
However, the company might not be able to realize its plans due to some industry-wide complications.
COVID-19 Prompted Component Shortage
Although Apple ranks as one of the world’s largest smartphone manufacturers, it is presently struggling to source electronic components because of the post coronavirus pandemic digitalization boom.
In response to the COVID-19 outbreak, consumers began purchasing laptop computers in mass to facilitate remote work and learning. Manufacturers significantly boosted their laptop production to meet demand, which strained part quantities worldwide. Consequently, Intel, MediaTek, and Realtek have been stymied by shortages of Wi-Fi, mobile processor, and Bluetooth chips, respectively.
Apple also had to grapple with limited chip availability after successfully deploying its iPhone 12 series. The firm sought to quickly fabricate more handsets this year to meet unexpectedly strong holiday quarter interest. But the corporation’s plans did not come to fruition due to a shortage of power management chips. At present, it appears the firm’s plans might once again be thwarted by the pandemic’s transformative impact on the world.
Huawei’s declining presence in the global mobile phone market may also contribute to Apple missing its production goal next year.
The Chinese conglomerate lost access to U.S. derived semiconductor technology this September because of new American export restrictions. Because of its inability to source new components, the firm will likely be unable to make new handsets after burning through its current part stockpile. The telecom’s chief domestic rivals are now competing to gobble up its local smartphone market share.
Beijing-based Xiaomi aims to make 240 million handsets next year, twice the number of units it shipped this year. Similarly, Dongguan-headquartered Oppo plans to build 170 million mobile devices in 2021, an increase of 13.3 percent from its estimated 2020 sales.
The two corporations’ high output targets have further constricted components availability. Nikkei Asia reports chipmaker United Microelectronics Corporation has fully booked its production capacity through the second quarter of next year. The publication also states Taiwanese Semiconductor Manufacturing Company (TSMC) will not have foundry space available until around Q3 2021.
GF Securities analyst Jeff Pu believes the one-two punch of the digitalization trend and Huawei’s headwinds will affect Apple’s roadmap. Pu predicts the company will ship 220 million smartphones next year, 4.5 percent less than its full-year goal.
That means Apple may end up disappointing a lot of consumers who intend to buy its newest hardware in 2021.