TAIPEI – Apple has reduced its planned production of the iPhone 12 mini for the first half of this year as part of a broader adjustment to production plans it formulated late last year, it said. informed Nikkei Asia.
The US technology giant reduces orders for all iPhones by about 20% compared to its plans in December, according to sources familiar with the matter, with most from the mini, its phone with cheaper 5G . 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-compatible line) during the first six months of 2021. The total also included the older iPhone 11. and iPhone SE models.
At one point, Apple even told some vendors that they needed components for more than 100 million iPhones during the first half of the year to try to secure components and production capacity amid global shortages.
Now the company is targeting a production of about 75 million units, slightly higher than iPhone shipments in the same period last year. The company told vendors it still plans to build 230 million iPhones by 2021, up more than 11 percent from last year, sources said.
The biggest overhaul is for components and parts for the 5.4-inch iPhone 12 mini, according to various sources, which will sell for around $ 699. Some vendors were even asked to temporarily stop building components specific to the mini, a source told Nikkei. The softer estimate was that Apple will reduce expected production by more than 70% over the six months to June.
“This year is still not bad, but of course demand for the first half of 2021 is not as high as people thought late last year,” another person told Nikkei.
Adjusting production levels for the iPhone 12, iPhone 12 Pro and Pro Max was relatively smooth and demand for these models remains relatively healthy, several people said.
“Some of the components and parts of the mini have been reassigned to the iPhone 12 Pro and iPhone 12 Pro Max,” said another person with direct knowledge of the matter.
Sources added that the downward revision also reflects a correction of Apple’s previous aggressive stockpile of components and parts at a time when manufacturers of smartphones, computers, servers, cars and more were preparing for fight for a limited supply of chips, printed circuit boards, screens and other resources.
Jeff Pu, a veteran smartphone analyst at GF Securities, told Nikkei that Apple had judged the demand for both the iPhone 12 Pro and the iPhone 12 mini.
“Consumers won’t have that very strong feeling about the differences between basic processors and 5G wireless communication performance immediately, but they can immediately see the difference in screen size,” Pu said. “If it’s about the same price, a lot of consumers would rather choose the older iPhone 11, which has a bigger screen, because they still don’t expect much from 5G.”
Another problem with the iPhone 12 mini is its battery, an Isaiah Research analyst told Nikkei Asia. “The battery of the iPhone 12 mini is much smaller than the older iPhone 11, which is about the same price, and is smaller than the battery of the iPhone 12, which is only $ 100 more expensive. “A 5G phone generally consumes more power, so consumers will be reluctant to buy a phone that, comparatively, does not have a good battery.”
Sources told Nikkei that late last year, between 10% and 15% of Apple orders for the iPhone 12 were allocated to the mini.
The change in production plans poses a major challenge for Apple suppliers, who will be forced to quickly adjust production utilization rates and labor resources, especially those that primarily supply parts for the iPhone 12 mini.
Meanwhile, Apple itself continues to enjoy a healthy demand for its premium models. In addition, demand for the iPhone 11, first launched in the fall of 2019, remains strong in emerging markets such as India.
Apple shipped 74.3 million iPhones during the January-June period last year, according to research company IDC. The revised production plan of about 75 million units still represents a slight growth compared to last year, although the plans are subject to changes in response to market dynamics.
Apple still maintains a full-year outlook of producing about 230 million iPhones, which would represent an 11.6% increase over last year. Sources claim that it is a matter of maintaining flexibility in the event of component shortages and responding to a new economic recovery in the second half of 2021. Last year, Apple sold 206 million iPhones, of which 90, 1 million were shipped in the October-December quarter, IDC data showed. Apple shipments increased 7.9% in 2020, although the global smartphone market contracted by 5.9%.
Meanwhile, Apple has rescheduled plans to begin mass-producing two new MacBook laptops during the second half of the year, according to previous programming in May or June, as Nikkei has learned. Both MacBooks will be powered by the Apple Silicon processor as part of a two-year transition out of Intel’s long-running microprocessors.
While Apple has tightened its iPhone production plans, the global shortage of chips and components that emerged last year has weakened its bargaining power, sources said. The company has allowed companies with specially adjusted supplies to maintain price levels, rather than asking for aggressive discounts each quarter, as it has done in recent years, they said.
Luca Maestri, chief financial officer of Apple, told investors in January that the company was experiencing some supply constraints, but estimated that supply and demand for the iPhone would strike a balance during the March quarter.
Apple declined to comment on this story.