Tech

The market is difficult, Apple does not increase iPhone production

According to Bloomberg’s sources, Apple has told suppliers to assemble about 220 million iPhones this year. Meanwhile, analysts forecast that the company will produce nearly 240 million iPhones due to the expectation of the iPhone 14 model to be released in the fall. However, the mobile industry got off to a rough start, and production fell as a result.

The worst inflation in decades, the war in Ukraine and supply chain turmoil – all threaten device sales in 2022. Research firm Strategy Analytics estimates overall smartphone sales will fall around 2%. During the year, TrendForce has lowered its full-year production forecast twice in recent weeks.

The market is difficult, Apple does not increase iPhone production - Photo 1.

iPhone 14 is expected to have more innovation than iPhone 13. (Image: Bloomberg)

Apple does not disclose production targets and stops publishing specific iPhone sales from 2019.

Apple has warned that supply problems will cost sales around $4 to $8 billion this quarter, largely due to the Covid-19 lockdown affecting production lines in China. The technology industry is also facing a downward trend in consumption as oil and raw materials prices rise, pushing up the cost of essential goods.

In the first quarter, smartphone shipments fell 11%, the deepest level since the pandemic began two years ago. The source said that Apple is betting on “elastic” demand for its devices due to its relatively affluent customer base and strong ecosystem of hardware and services that complement the hardware. The company also does not face great competitive pressure when rival Huawei is no longer available in the market. Huawei, once the world’s No. 1 smartphone maker, suffered a six-quarter drop in revenue.

In addition, Apple hopes to attract customers with an iPhone model that has more breakthroughs than last year’s model. iPhone 14 is expected to be equipped with a new screen size and better features such as satellite messaging. iPhone 13 launched in 2021 is only considered an insignificant upgrade.

Recently, the company introduced a new version of the iPhone SE, which supports 5G connectivity, accelerating the upgrade cycle of price-conscious customers.

While the lockdown in China will have a big impact on Apple in the quarter, the company can weather adversity. Foxconn, one of the main iPhone manufacturers, has kept factories running, including the largest complex in Zhengzhou.

Smartphone demand usually declines in the second quarter, which means the impact of the blockade will not be severe. Suppliers will try to make up for any shortfalls in production later in the year, when they hire more workers for the peak season, as long as China fully opens up and restores shipping routes.

This year will be dramatic, said Linda Sui, senior director of Strategy Analytics. “Geopolitics, component shortages, inflation, exchange rate fluctuations and Covid disruptions will continue to weigh on the smartphone market in the first half of 2022, before the situation eases in the second half. “.

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