TAIPEI – Apple is reducing its planned production of the iPhone 12 mini in the first half of this year, as part of a broader adjustment to the production plans it formulated at the end of last year, Nikkei Asia found out.
The US technology giant is reducing orders for all iPhones by about 20% compared to its December plans, according to sources familiar with the matter, with most coming from the mini, the cheapest 5G phone. Late last year, Apple told vendors to secure components and parts for up to 96 million phones, including the entire iPhone 12 series – its first 5G-enabled range – for the first six months of 2021. The total also included the iPhone. 11 older. and iPhone SE models.
At one point, Apple even told some vendors that it needed components for more than 100 million iPhones in the first half of the year, in an attempt to secure components and production capacity amid the global shortage.
The company now aims to produce about 75 million units – slightly higher than iPhone deliveries in the same period last year. The company told suppliers it plans to build another 230 million iPhones by 2021, up 11 percent from last year, sources said.
The biggest review is for components and parts for the 5.4-inch iPhone 12 mini, several sources said, which sells for about $ 699. Some suppliers have even been asked to temporarily stop building components specifically for the mini, a source told Nikkei. The easiest estimate was that Apple will reduce its planned production by more than 70% for the six months to June.
“This year is still not bad, but of course the demand for the first half of 2021 is not as high as people thought at the end of last year,” another person told Nikkei.
Adjusting production levels for the iPhone 12, iPhone 12 Pro and Pro Max has been relatively easy, and demand for these models remains relatively healthy, several people said.
“Some of the components and parts for the mini have been reallocated to the iPhone 12 Pro and iPhone 12 Pro Max,” said another person with direct knowledge of the subject.
Sources added that the downward revision also reflects a correction of the previous aggressive reservation of Apple components and parts, at a time when manufacturers of smartphones, PCs, servers, cars and more were preparing to fight for limited supply of chips, circuit boards, displays and other resources.
Jeff Pu, a veteran smartphone analyst at GF Securities, told Nikkei that Apple misjudged the claim for both the iPhone 12 Pro and the iPhone 12 mini.
“Consumers won’t have that very strong feeling about the differences between core processors and 5G wireless communication performance right away, but they can immediately see the difference in screen size,” Pu said. “If it’s about the same price, many consumers would prefer to choose only the older iPhone 11, which has a larger screen because it doesn’t expect much from 5G yet.”
Another problem for the iPhone 12 mini is its battery, an analyst at Isaiah Research told Nikkei Asia. “The battery for the iPhone 12 mini is much smaller than the older iPhone 11, which is about the same price and is smaller than the battery in the iPhone 12, which is only 100 USD more expensive … A 5G phone generally consumes more power, so consumers will be reluctant to buy a phone that, by comparison, does not have a good battery. “
Sources told Nikkei that at the end of last year, about 10% to 15% of Apple’s orders for the iPhone 12 series were allocated to the mini.
Changing production plans is a major challenge for Apple suppliers, who will be forced to quickly adjust their production utilization rates and labor resources, especially those that mainly supply parts for the iPhone 12 mini.
Meanwhile, Apple itself is still enjoying healthy demand for its premium models. In addition, demand for the iPhone 11, first launched in the fall of 2019, remains robust in emerging markets such as India.
Apple shipped 74.3 million iPhones in January-June last year, according to research firm IDC. The revised production plan of around 75 million units is still a slight increase from last year, although the plans may be changed in response to market dynamics.
Apple still maintains a year-round outlook of producing about 230 million iPhones, an increase of 11.6% over last year. Sources say this is to maintain flexibility if there is a shortage of components and to respond to an additional economic recovery in the second half of 2021. Last year, Apple sold 206 million iPhones, of which 90 , 1 million were delivered in the October-December quarter, IDC data showed. Apple deliveries increased by 7.9% in 2020, despite the global smartphone market that contracted 5.9%.
Meanwhile, Apple has rescheduled plans to begin mass production of two new MacBook laptops in the second half of the previous May or June schedule, Nikkei said. The two MacBooks will be powered by the Apple Silicon processor as part of a two-year transition from long-running Intel microprocessors.
As Apple adjusted its iPhone production plans, the global lack of chips and components that emerged last year weakened its bargaining power, sources said. The company has allowed tight-knit supply companies to maintain price levels, rather than asking for aggressive quarterly discounts, as it has done in recent years, they said.
Apple chief financial officer Luca Maestri told investors in January that the company was facing some supply constraints, but estimated that supply and demand for the iPhone would reach a balance in the March quarter.
Apple declined to comment on the story.