Iphone Factory ChinaSource: Apple

What you need to know

  • The 5G iPhone may see less demand than desired.
  • iPhone suppliers are anticipating cuts to supply orders.
  • Companies are also expecting cuts in the workforce.

Apple's factories in China seems to be ramping up in their capacity to manufacture its newest iPhones for the fall, but the issue may become less about the supply chain and more about whether or not the demand for the new devices will be there.

A senior official at one of the company's contract assemblers reports that "Apple's orders for the quarter ending in March are likely to drop 18% compared with the previous year". They also said that production ramp-up for the 5G iPhone has been postponed, but that the move does not necessarily mean the launch itself is delayed.

The company appears to be worried about the possibility that, with the world fighting the coronavirus pandemic, the demand for its flagship smartphone will be tempered at best in some of its key markets.

"No one is talking about manpower or material shortage (in China) anymore. Now everyone is looking at whether demand from U.S. and Europe could keep up ... the focus now is the demand from consumers in the U.S. and Europe."

According to someone familiar with the matter, one of Apple's display suppliers is also bracing for a reduction in units ordered. The company reportedly had planned to ship as many as 70 million iPhone displays by the end of the year, but is now"considering lowering that target by more than 17% to 58 million units".

Apple may also reduce the workforce at its production facility in Vietnam, a move that may become necessary as both Vietnam and Malaysia continue to impost further public restrictions in response to the coronavirus pandemic.