TAIPEI – Apple is cutting its planned production of the iPhone 12 mini for the first half of this year as part of a broader adaptation of the production plans it formulated late last year, Nikkei Asia has learned.
The US tech giant is cutting orders for all iPhones by about 20% compared to its plans in December, according to sources familiar with the matter, with the majority coming from the mini, its cheapest 5G-enabled phone. Late last year, Apple told vendors to secure components and parts for up to 96 million devices, including the entire iPhone 12 series – the first 5G-enabled series – for the first six months of 2021. The total also includes older iPhone 11 included. and the iPhone SE models.
At one point, Apple even told some vendors that they needed components for more than 100 million iPhones for the first half of the year in an effort to secure components and production capacity amid global shortages.
The company now aims to produce 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, an increase of more than 11% from last year, sources said.
The biggest review is for components and parts for the 5.4-inch iPhone 12 mini, according to various sources, which sells for about $ 699. Some suppliers have even been asked to temporarily discontinue components specifically for the mini, a source told Nikkei. The mildest estimate was that Apple would reduce planned production by more than 70% for the six months to June.
“This year is still not bad, but demand for the first half of 2021 is obviously 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 soft and demand for the models remains relatively healthy, several people said.
“Some of the components and parts for the mini have been redesigned to the iPhone 12 Pro and iPhone 12 Pro Max,” said another person with direct knowledge of it.
Sources added that the downward revision also reflects a correction from Apple’s previous aggressive discussion of components and parts at a time when manufacturers of smartphones, computers, servers, cars and more were preparing to fight for limited stock of chips, printed circuit boards. , screens and other resources.
Jeff Pu, a veteran smartphone analyst at GF Securities, told Nikkei that Apple misjudged the demand for both the iPhone 12 Pro and the iPhone 12 mini.
“Consumers will not immediately have such a strong feeling about the differences between core processors and the 5G wireless communication performance, but they can immediately see the difference in screen size,” Pu said. “If it’s about the same price, many consumers would rather choose the older iPhone 11, which has a larger screen because they don’t expect much from 5G yet.”
Another problem for the iPhone 12 mini is the battery, an Isaiah Research analyst 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 it’s smaller than the battery in the iPhone 12, which is only $ 100 more expensive. … a 5G phone usually consumes more power, so consumers will be reluctant to buy a phone that, relatively speaking, does not have a good battery. ‘
Sources told Nikkei that by the end of last year, about 10% to 15% of Apple’s orders for the iPhone 12 series had been awarded to the mini.
The change in production plans is a major challenge for Apple vendors, who are being forced to quickly adjust their production utilization and labor resources, especially those that mainly supply parts for the iPhone 12 mini.
Apple itself, meanwhile, is still enjoying a healthy demand for its premium models. Demand for the iPhone 11, first launched in the fall of 2019, remains strong in emerging markets such as India.
According to research firm IDC, Apple shipped 74.3 million iPhones in the January-June period last year. The revised production plan of approximately 75 million units still represents a slight growth compared to last year, although plans are subject to change in response to market dynamics.
Apple still maintains the outlook for production of approximately 230 million iPhones for the full year, which will represent an increase of 11.6% over last year. Sources say it is to maintain flexibility in case of component shortages and to respond to further 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 shown. Apple’s shipments increased by 7.9% in 2020, despite the global smartphone market increasing by 5.9%.
Meanwhile, Apple has plans to launch two new MacBook laptops in mass production in the second half of the year, according to the previous schedule of May or June, Nikkei has learned. The two MacBooks are powered by the Apple Silicon processor as part of a two-year transition away from Intel’s microprocessors.
While Apple has adjusted 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 particularly limited prices to maintain price levels, rather than asking for quarterly aggressive discounts as it has done over the past few years.
Apple chief financial officer Luca Maestri told investors in January that the company was experiencing some supply constraints, but estimated that demand and supply for the iPhone would balance during the March quarter.
Apple declined to comment on this story.