Last year, Apple projected it would need components for around 100 million iPhones for the first half of 2021. Now the tech giant is slashing planned production for all iPhones, according to a new report.
Nikkei reports industry sources have said Apple requested suppliers to downshift production by 20% compared to its December plan. The majority of the production cuts come from the iPhone 12 mini, the cheapest 5G-enabled phone in its lineup.
Apple targets around 75 million iPhones for the first six months of the year - down from its initial estimate of 96-100 million. iPhone shipments over the period are expected to be slightly higher than the same period last year. Overall, the company plans to build 230 million iPhones for 2021, an increase of about 11% from last year.
The most significant slash in production is the 5.4-inch iPhone 12 mini, multiple sources said. "Some suppliers were even asked to stop building components specifically for the mini temporarily," a source told Nikkei. One estimate says Apple will cut planned production by more than 70% for the six months through June for the smartphone.
"This year is still not bad, but of course, demand for the first half of 2021 is not as high as people were thinking at the end of last year," another person told Nikkei.
Nikkei's report is the latest news that Apple's flagship smartphone lineup has had demand difficulties. Reuters said iPhone 12 mini is expected to make up about 5% of Apple's smartphone sales in the first half. This is down from 10-15% at the end of last year.
Due to languishing demand for the new mini iPhone, "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.
Jeff Pu, a veteran smartphone analyst with GF Securities, told Nikkei that Apple's CEO Tim Cook "misjudged demand 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 about 5G wireless communication performance immediately, but they can immediately see the difference in screen size," Pu said. "If it's around the same price, many consumers would rather just pick the older iPhone 11, which has a larger screen, as they don't yet expect much from 5G."
So what about all those Apple analysts who were predicting a new "supercycle" for the iPhone?? It appears their so-called "expert" analysis is rubbish as the ongoing global pandemic dents consumers' pockets.
Now, this could all change if Americans decide to use their stimulus checks to purchase Apple products. The question readers should be asking is the "pent-up demand" narrative just a bunch of crap?