What you need to know
- A new report says Apple is cutting all iPhone orders by 20% in the first half of 2021.
- That includes a huge reduction of at least 70% in iPhone mini production.
- Apple is still expected to increase iPhone production year on year, however.
A new report claims Apple is cutting orders for all iPhones by around 20% in the first half of 2021, including a huge reduction in iPhone 12 mini orders of at least 70%.
From Nikkei Asia:
Apple is slashing its planned production of the iPhone 12 mini for the first half of this year as part of a broader adjustment to output plans it formulated late last year, Nikkei Asia has learned.
The U.S. tech giant is cutting orders for all iPhones by around 20% compared to its plans in December, according to sources familiar with the matter, with the majority coming from the mini, its cheapest 5G-enabled phone. Late last year, Apple told suppliers to secure components and parts for up to 96 million handsets, including the entire iPhone 12 series -- its first 5G-enabled lineup -- for the first six months of 2021. The total also included older iPhone 11 and the iPhone SE models.
The report indicates that Apple is cutting orders for iPhones across the board, rather than just one specific model. The report says Apple told some suppliers at one point that it needed parts for over 100 million iPhones in the first six months of the year, however, the report notes this may have been Apple pre-empting component shortages, rather than anticipating demand. The 1H20 figure for iPhone production is now closer to 75 million units, slightly up on 2020. Apple reportedly says it still plans to build 230 million iPhones this year, 11% more than last year.
The biggest loser, as we've heard repeatedly, is the iPhone 12 mini. From the report:
The biggest revision is for components and parts for the 5.4-inch iPhone 12 mini, multiple sources said, which retails for around $699. Some suppliers were even asked to temporarily stop building components specifically for the mini, a source told Nikkei. The mildest estimate was that Apple will cut planned production by more than 70% for the six months through June.
The report echoes one from February claiming Apple may stop producing the iPhone 12 mini altogether, as the company will have enough devices already made to fulfill demand.
The report does, however, clarify that adjustments for the iPhone 12, iPhone 12 Pro, and the iPhone 12 Pro Max have actually seen some parts reallocated to their production and that the adjustment for those models was comparatively mild, thanks to their popularity as some of the best iPhones in the last couple of years. Analyst Jeff Pu told the publication Apple "had misjudged demand for both the iPhone 12 Pro and the iPhone 12 mini":
"Consumers won't have that very strong feeling about the differences between core processors and about 5G wireless communication performance immediately, but they can immediately see the difference in screen size," Pu said. "If it's around the same price, many consumers would rather just pick the older iPhone 11, which has a larger screen, as they don't yet expect much from 5G."
The report claims the change in production plans "poses a major challenge" for Apple suppliers.