Apple willing to sacrifice profit margins to meet incredible iPhone 6 demand

Apple willing to sacrifice profit margins to meet incredible iPhone 6 demand


iPhone 6 and 6 Plus Photo: Jim Merithew/Cult of Mac
Photo: Jim Merithew

Tim Cook wasn’t kidding when he said that the iPhone 6 and 6 Plus were proving to be Apple’s most popular iPhones of all time.

Two new reports coming out of Apple’s Chinese supply chain today demonstrate the extent to which this is true. According to one report, Apple’s Chinese production line is on course to ship a total of 50 million iPhone 6 devices by the end of 2014 — referring only to the 4.-inch iPhone 6 and not including the 6 Plus.

By comparison, for the calendar fourth quarter of 2013, Apple sold a total of 51 million iPhones all-in, which itself marked an all-time quarterly record.

To allow manufacturer Pegatron Technology to focus on building these iPhone 6 devices, Apple has reportedly shifted its iPhone 5c production from Pegatron to another manufacturer, Wistron. Orders for the iPhone 6 are expected to boost Pegatron’s consolidated revenues to a record-breaking $9.54 billion in this year’s fourth quarter.

It’s not just the iPhone 6 that’s making waves, either. Apple’s also desperately trying to get more iPhone 6 Plus handsets flying out of the door by offering Foxconn more money to build them.

In an effort to increase efficiency, Apple is reportedly even willing to slash its own margins by raising payments to Foxconn by 20-25% and paying $24-25 for each iPhone 6 Plus made — rather than the $20 Apple currently spends.

While these added fees could have a substantial boost on Foxconn’s own Q4 revenues, it is said that the quotes will gradually return to original levels once Foxconn’s production capacity and yield rates have increased.

However you slice it, folks, this iPhone business sure has legs…


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