Apple bets big on 5G iPhone lineup despite demand concerns

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iphone-12-pro
An artist's take on 'iPhone 12' with 5G.
Photo: The Hacker 34

Apple is asking suppliers to “crank out” components for its upcoming 5G iPhone lineup, despite some fears that it could launch to weak demand as a result of COVID-19, a Tuesday report claims.

The company is said to have confirmed plans to make around 213 million iPhone units in the 12 months through March 2021 — an increase of 4% over the same period last year.

Some suppliers are concerned that initial orders could end up being “significantly lower.”

The ongoing pandemic has had a significant impact on retailers, with overall retail demand falling 90% in the U.S., according to early April data from the Amperity COVID-19 Retail Monitor.

Some reports suggest iPhone sales have also begun to plummet as Apple retail stores remain closed in most markets, and consumers reserve their hard-earned cash for essential purchases.

It seems, however, that Apple is confident iPhone fans will flock to buy its first handsets equipped with ultra-fast 5G connectivity — and it wants to ensure there are plenty to go around.

Apple asks suppliers to ramp up new iPhone components

Apple “is expected to build up inventories of its new 5G phones due to concerns over possible component shortages, despite the possibility of falling global demand,” reports Nikkei Asian Review.

In line with other sources, Nikkei expects Apple to introduce three to four new iPhone models with 5G this fall. It believes shipments of “necessary components” have already begun.

The COVID-19 pandemic and a fall in retail revenue hasn’t stopped Apple from pushing forward with its hardware plans for 2020 so far. We’ve already seen a new MacBook Air, iPad Pro, and iPhone SE.

Sources say that production of existing and new iPhone models — including iPhone SE and the 5G iPhone lineup — will be split 50/50.

A realistic forecast?

“Apple’s production outlook is pretty bullish, and we will need to assess whether it is based on a realistic demand [forecast],” said one executive with an unnamed Apple component-maker.

It is believed that retail store closures have made it harder for Apple to gauge interest in upcoming products. However, it seems the company would rather be optimistic with its iPhone orders than deal with a shortage should demand exceed expectations. This is good news for those still planning to upgrade this year.

Some believe that the upgrade to 5G will have a significant impact on Apple’s iPhone business — even with a slow start. The technology will “exceed its hype, and Apple is one of the best ways to invest in the transformation driven by 5G,” according to analyst Gene Munster.

Nikkei warns that Apple could revise its forecast before orders are officially placed with suppliers in May and June. Should the pandemic continue to have a big impact, its numbers could fall.

Apple is expected to produce around 200 million iPhone units this year, which is around 10% fewer than the company’s previous estimate of almost 220 million units, thanks to the coronavirus.