FactorySource: Apple

What you need to know

  • Apple has reportedly asked suppliers to boost iPhone production by 10% in the first half of 2020.
  • Orders consist of around 65 million current models, and 15 million new, low-cost iPhones.
  • Reports warn however that Apple supply chains are braced for disruption from Coronavirus.

Separate reports suggest that Apple has raised its iPhone orders to around 80 million units for the first half of 2020, however that target is in jeopardy as suppliers brace for coronavirus disruption.

According to Nikkei Asian Review:

Apple has asked its suppliers to make up to 80 million iPhones over the first half of this year, people familiar with its planning told the Nikkei Asian Review, a rise of over 10% on last year's production schedule that could boost the company's near-record share price.

The report claims that around 65 million these are current models, mostly the iPhone 11, whilst a further 15 million are for Apple's new, rumored low-cost iPhone, expected to be announced as early as March of this year.

However, these targets have been cast into doubt as suppliers brace for disruption from coronavirus. According to Nikkei Asian Review:

Rising orders for Apple iPhones have helped double the company's share price over the past year, although its Asian suppliers now warn that China's coronavirus has created "massive uncertainties" about iPhone production.

According to Bloomberg:

(Bloomberg) -- Apple Inc.'s China-centric manufacturing base is at risk of disruption after the Lunar New Year holiday as the company's partners confront the coronavirus outbreak that has gripped the country and caused more than 100 deaths.

Virtually all of the world's iPhones are made in China, primarily by Foxconn's Hon Hai Precision Industry Co. at its so-called iPhone City in Zhengzhou and by Pegatron Corp. at an assembly site near Shanghai. Each of those locations is more than 500 kilometers away from Wuhan in central China, the epicenter of the viral outbreak, but that distance doesn't immunize them from its effects.

One analyst said:

"I can't imagine a scenario where the supply chain isn't disrupted... If there's one major hiccup in the raw materials, fabrication, assembly, test, and shipping, it will be a disruption."

Apple employs 10,000 people directly in China across retail and corporate, and its supply chains have a few million workers. Analyst Dan Ives said:

"Supply chain disruption is a worry if employees across Foxconn and other component manufacturing hubs in China are restricted... If the China outbreak becomes more spread it could negatively impact the supply chain which would be a major investor worry."

According to the report, Foxconn claims that it has measures in place to ensure it can continue to meet all global manufacturing obligations. The coronavirus death toll now stands at over 100. Various reports also note that Wall Street is taking notice of these developments, and as reports have escalated, Apple has seen dips of nearly 3% in its share price, in particular since Friday, January 24, where shares began as high as $322, before falling over the weekend to less than $309 on Monday.