Apple Will Crank out New 5G iPhones Regardless of Demand
Apple has already admitted that it’s going to miss revenue targets, so it probably isn’t too concerned with how many iPhones it will actually be able to sell come this fall, despite rumours that it might have been planning to delay the launch until consumer demand picks up in order to avoid the risk of the new 5G iPhone being seen as a sales flop.
However, there’s been little doubt that Apple’s supply chain is champing at the bit to begin cranking out new iPhones, so it doesn’t seem likely there will be any manufacturing challenges, and in fact most of the other rumours we’ve heard of recent delays are related to engineering problems, like the mmWave 5G antenna module, rather than problems with the supply chain itself.
Stockpiling 5G iPhones
However, it appears that weak demand isn’t going to be enough to deter Apple from producing new iPhones. As Nikkei Asian Review reports, Apple actually wants to start production as soon as possible, even if it means that it will have to keep a stockpile of 5G iPhones stashed away in its warehouses.
According to the report, Apple has already told several of its suppliers that it expects to order 213 million iPhones over the next twelve months (through March 2021), which is actually an increase from last year by about 4 percent. Although some suppliers still believe these numbers could go down, that may not actually be the case as Apple wants to stay ahead of the curve as much as possible here.
The problem is not only being able to make sure that there will be enough iPhones made to meet a sudden surge in demand that could still occur, but even more importantly, Apple is concerned that it may face component shortages later on in the year. While its supply chain has almost everything it needs to make iPhones right now, that might not be the case if production gets delayed by several months.
Part of the ramp-up, however, is also based on Apple’s recently released iPhone SE, which is expected to be a dark horse contender this year. In fact, Apple is expecting the iPhone SE to be such a hit that it’s actually split its production nearly 50/50 between the iPhone SE and the entire rest of the upcoming 5G-capable iPhone 12 lineup, Nikkei notes.
To be clear, Apple has yet to place official orders with its suppliers — that’s not going to happen until at least May — so it could still revise its outlook, but right now it seems that the company plans to pursue an aggressive manufacturing schedule, even if many of its suppliers remain skeptical.
Certainly there’s no doubt that Apple has more than enough cash in the bank to afford to create a stockpile of iPhones, and while it’s not something that the company has typically done in the past — Apple CEO Tim Cook is legendary for his “just-in-time” logistics chain — these are atypical times, and Apple needs to plan for the future if it hopes to weather the current storm.