Before the end of this year, Apple has asked its upstream supply chain to manufacture between 72 and 78 million tenth-generation iPhone units by the end of the year. These devices are expected to be branded as iPhone 7 units, with the 4.7-inch model labeled “iPhone 7” and the larger 5.5-inch model labeled either iPhone 7 Plus or “iPhone Pro.”
The manufacturing order is roughly 7 to 12 million units higher than the 65 million projection that Wall Street analysts had originally estimated, raising keen interests in seeing how Apple intends to convince loyal iPhone users and first-time purchasers to stay with its platform no matter how much its sales numbers have remained stagnant over the past several quarters.
According to the company’s latest Q1 2016 earnings results, iPhone sales were essentially flat all of 2015 – the first time since the original iPhone debuted in June 2007. This gave many investors the indication that the incremental features offered in the iPhone 6S and iPhone 6S Plus were not enticing enough to garner an efficient performance-to-value upgrade path for most consumers. The company sold 74.78 million iPhone units in total during the holiday quarter between November and January, compared to a 76.5 million estimate after Forbes polled 32 Apple analysts – twenty four Wall Street professionals and eight “veteran amateurs,” it says.
Image credit: Bloomberg.com
In 2015, Apple asked its manufacturers to produce between 85 and 90 million iPhone 6S and iPhone 6S Plus units before the end of the year. This request was for two device models that had almost no aesthetic changes over its predecessors, the iPhone 6 and iPhone 6 Plus. In fact, almost all of the changes were internal – a new Qualcomm LTE modem supporting double the previous modem’s data speeds, a new NFC chip for Touch ID and a new 4K (3840x2160p) rear camera sensor for sharper video recording and playback functionality.
By comparison, in 2014, Apple ordered its manufacturers to produce 70 to 80 million iPhone 6 and iPhone 6 Plus units by the end of the year.
On Monday, shares of Pegatron stocks in Taiwan trading gained 10 percent, according to Barron’s. Meanwhile, TSMC jumped 3.8 percent, Hon Hai Precision (Foxconn) gained 5 percent, and Catcher Technology, the manufacturer of Apple’s aluminum shell casing, gained 10 percent.
The upswing in stock prices contradicts a previous Nikkei.com report that iPhone sales are expected to be bleak throughout the rest of the year, claiming TSMC’s operating profit from manufacturing Apple’s A10 SoC would remain flat due to stagnant iPhone sales. Apple has reportedly offered TSMC an exclusive contract to manufacture its custom A10 chip for tenth-generation iPhone units, with Samsung no longer a supplier.