Nikkei: Apple has ordered enough parts to build 230 million iPhones next year

From “Apple plans 30% boost in iPhone production for first half of 2021” posted early Tuesday:

Apple plans to produce up to 96 million iPhones for the first half of 2021, a nearly 30% year-on-year increase, after demand for its first-ever 5G handsets surged amid the pandemic, Nikkei Asia learned.

The Cupertino-based tech giant has asked suppliers to build some 95 million to 96 million iPhones, including the latest iPhone 12 range and the older iPhone 11 and iPhone SE, multiple people familiar with the matter told Nikkei Asia — though industrywide shortages of key components could threaten that target.

The tentative full-year forecast that Apple shared with its suppliers suggests it plans to build up to 230 million iPhones in 2021, including both old and new models, the people said. This would mark a 20% rise from 2019, though the target will be regularly reviewed and revised in response to any changes in consumer demand, they added.

“The planned production for the next quarter and the following quarter have been decided and the outlook is quite bright,” an executive at a key Apple supplier told Nikkei. “The iPhone 12 Pro, and iPhone 12 Pro Max are especially stronger than we estimated, while the demand for iPhone 12 is in line with the forecast, but iPhone 12 mini is a bit sluggish,” the person added.

My take: Is this what a supercycle looks like?

UPDATE: “Yes!” says Wedbush’s Daniel Ives (Outperform, $160) in a note to clients that just landed on my desktop…

Nikkei Report is Another Bullish Sign of iPhone 12 Demand and Supercycle Thesis

UPDATE 2: The stock popped.

17 Comments

  1. Jerry Doyle said:
    “…. The iPhone 12 Pro, and iPhone 12 Pro Max are especially stronger than we estimated, …. ”

    How high are the margins Mama? High & risin’ son 🙂

    Mama, it looks to be a very merry Apple Christmas, Happy Hanukkah, Happy Holidays! Dang Mama, it looks to be one fantastic year in 2021 and even 2022. Lordy, Lordy, Lordy Mama!

    Oh Mama! Bring on the sausage biscuits and milk gravy. This is looking the way I thought it was going to look. 🙂

    7
    December 15, 2020
    • Romeo A Esparrago Jr said:
      ::: { dancing_baby_meme } :::

      2
      December 15, 2020
  2. Fred Stein said:
    We need “Spinal Tap’s” dial that goes to 11.

    2
    December 15, 2020
  3. Romeo A Esparrago Jr said:
    Great news!

    Apple Online Store says if I order a blue iP12 ProMax 512Gb today Dec15, it should deliver Dec31. Hopefully that improves when I order in January.

    With all the front porch thefts news I get from my local Ring and NextDoor neighborhoods (Tis The Season!), definitely best to order in January & have it delivered to a FedEx Store where I can pick it up. Too precious for it to get lost or stolen and wait some more for a replacement.

    My HomePod Mini pair hasn’t shipped yet but I didn’t arrange for it to deliver to a FedEx Store but to my porch. Nervous about that …

    2
    December 15, 2020
    • Bart Yee said:
      If you have a FedEx account (easily established), you can track and get text progress notifications, and make changes to how you would like FedEx to deliver including hold at depot or pickup at a FedEx Office location. Easy to do and very helpful if you are concerned about package theft.

      2
      December 15, 2020
  4. Jerry Doyle said:
    As I write this post Apple up $3.37 to $125.15.

    2
    December 15, 2020
  5. Jerry Doyle said:
    My target price always has been $150 by the time of Q2 financial call in late April, 2021. That was and is a very reasonable projection, although most professional analysts always were quite a bit below that target price with the exception of our good brother Dan Ives who is bless with the Apple spirit of edification many possess on this blog. Gene Munster has been touting lately Apple is a $200 stock, and of course we all know that fact. Gene never gives a target price date and this may be a question someone may want to pose, asking Gene what is his time frame for that $200 target.

    We want get a true feel on iPhone 12 adoption rate until we hear the Q2 performance since that will be the first full quarter where all four iPhone models are available throughout the quarter.

    1
    December 15, 2020
    • Roger Schutte said:
      Jerry, on the Capiche.fm call of 2 weeks ago, I asked Gene for a date on his $200 price target and his reply wasn’t too exact. He wouldn’t commit to it being possible within 12 months but eventually got around to saying it could happen in 1-2 years. Regardless, he’s bullish.

      2
      December 15, 2020
      • Jerry Doyle said:
        @Roger Schutte: Thanks for your comment! Your response is most informative. I also believe we are looking at a $200 stock price and when I heard Gene M say it, it WAS the corroboration I needed since it came from him for whom we all hold highly in respect with his deep understanding of Apple. So, I commenced attempting analyzing when can we reasonably see a $200 price? I came up with (get this) at the financial call of Q2 2022. We could see that price sooner, but little doubt for me we will see it (and perhaps higher) by the financial call on Q2 2022 performance. 🙂

        1
        December 15, 2020
  6. Bart Yee said:
    There have been a few articles decrying the somewhat soft demand for the $699 iPhone 12 mini, speculating that the mini will be a sales failure while demand for pricier models remains robust.

    My take: The Mini fills a particular niche but also provides an iPhone model and price floor for comparison. If iPhone users and upgraders feel that the larger iPhone 12, 12 Pro or 12 Pro Max offer a better size, bang for price value, or more features that they are more than willing to pay for, heh, far be it for Apple to complain if they want to self-upsell. ASP expansion will be the result.

    Recall also that the iPhone 11 and XR are now selling at relatively discounted prices and present compelling value options for those who don’t yet want or need 5G iPhones. While this may depress ASP mildly, the amortized and discounted BOM costs make these models likely as or more profitable. They also extend the A13 CPU line & accessories plus engage users into the Apple ecosystem.

    1
    December 15, 2020
    • David Baraff said:
      The mini a bust? Hardly. 100% of the people I surveyed reported they bought one.(*)

      ———————
      (*) Out of a pool of one person asked. Disclosure: it was me.

      5
      December 15, 2020
      • Romeo A Esparrago Jr said:
        @David B
        My sample sizes are the same! GMTA!!
        Thumbs up!

        2
        December 15, 2020
        • Kemble Widmer said:
          I’m another; two weeks in and the iPhone 12 mini is perfect in every way. Would not have upgraded had it not been the smaller form factor and 5g (for its future capability).

          0
          December 15, 2020
  7. Bart Yee said:
    There are other direct and indirect effects of this type of production order:
    1) Apple is locking up key parts supplies now before full pandemic recovery tips demand positive overall for the Android market. Apple is boldly and preemptively freezing out other makers while likely getting very good terms on these parts from reliable sources. Others will have to find second and third sources.

    2) Apple will ensure it doesn’t have to pay the almost $1B fee for under-ordering Samsung OLED displays in the past. Since Samsung currently supplies 90% of Apple OLEDs, Apple is going to make sure it gets usable display parts for the contracted money to be spent.

    3) Apple Is signaling it intends to have the iPhone 11, SE, and iPhone 12 series around for at least 2-3 more years, providing yet more price point coverage and choices for consumers worldwide. In particular, the iPhone 11 at discounted prices remains now an upper mid price non-5G competitor for areas still planning and awaiting 5G rollout.

    4
    December 15, 2020
    • Gregg Thurman said:
      Apple is boldly and preemptively freezing out other makers

      Apple has been doing this since the original iPod. They bought Toshiba’s entire production capacity (3 years) for their 2.5″ HD that, at the time, nobody was interested in. Toshiba was the only producer of that HD. After the iPod was introduced the copiers tried to copy the iPod, but couldn’t.

      It is a strategy that Apple has used successfully on several occasions.

      2
      December 15, 2020
      • Tommo_UK said:
        @Greg They did the same with NAND flash memory production for three years out, effectively freezing out all other manufacturers from developing MP3 players to compete with the iPod after it went completely solid state. Tim Cook at his best.

        0
        December 15, 2020
        • Gregg Thurman said:
          Is there anybody better?

          And now he’s going to let everybody have a many Intel processors as they want. Genius.

          (Back to trimming the tree)

          0
          December 15, 2020

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