TAIPEI / PALO ALTO, USA – Apple is pressing its suppliers to try to reduce delays in the production of its first 5G iPhones, as the US technology company aims to limit the consequences of the coronavirus pandemic.
Apple faces delays of between four weeks and two months for the mass production of the four models in its 5G line after deferrals caused by factory closings and absences in the workplace during the pandemic, sources told the Nikkei Asian. Review. Apple has heavily bet on 5G range to help it against rivals like Samsung and Huawei Technologies, which introduced 5G-capable smartphones last year.
But sources said Apple has aggressively tried to reduce delays and was now less likely to face the worst-case scenario of postponing launch until 2021, the situation it was in three months ago. Estimated delays are based on the stage at which development would normally launch in September.
The tech giant and its vendors are working overtime to make up for lost time, people with knowledge of the matter said.
“What seems like progress now is months behind schedule in terms of mass production, but Apple is doing everything possible to shorten the delay. There is a possibility that the schedule may still be brought forward,” one source told Nikkei.
California, where Apple is headquartered, was subjected to “home shelter” restrictions in March, although the order was revised in June to allow more companies to reopen. Part of Apple’s hardware development team returned to headquarters last month when the company attempted to speed up the final setup of the new iPhones and stay as close to the expected September release date as possible, according to another source familiar with the situation.
“Some new lead times for product-related projects have been increased since the hardware team began returning to the office,” the source said.
Apple’s decision to bring some employees back to the office sets the company apart from most of its Silicon Valley peers, highlighting iPhone manufacturers’ heavy reliance on engineering and testing processes that are difficult to carry out. carried out remotely.
Another source said the situation remained dynamic, even if the company has set an aggressive schedule for suppliers. “Part of the final iPhone assembly could be delayed until the beginning of October, and it would not be surprising if there are more delays because there is still a lot of testing in progress and the final designs have not yet been blocked,” the person said. .
Apple declined to comment on the matter.
The company remains an industry benchmark, with millions of jobs in China depending directly or indirectly on its shipping plans. Any changes to their schedules are hugely significant for individual vendors and would impact the technology supply chain, with repercussions for other manufacturers.
Apple earlier this year set an aggressive target for the launch of 5G iPhones by ordering components for up to 100 million units by 2020. However, due to Covid-19, it has reduced volume to around 80 million units and could make more adjustments. Depending on market demand, people familiar with the matter said.
The 80 million-unit target, which is on a scale similar to previous years, remains a relatively healthy level given the way the coronavirus pandemic is affecting the global economy, they said.
Apple is also preparing healthier-than-expected orders for older models to maintain sales momentum as it prepares its first-line iPhone 5G. Those models include the iPhone XR, the iPhone 11 range, and the new iPhone SE, which went on sale for $ 399 in April.
Apple has asked suppliers to build more than 45 million units of the older models by the second half of 2020, in a move to protect the company in case of delays on the new iPhone 5Gs, sources told Nikkei.
The order numbers should assure suppliers that Apple is confident that sales will be healthy despite the coronavirus pandemic. However, actual demand remains to be seen, and the company could still adjust orders after the product’s launch.
The relatively affordable iPhone XR went on sale in the second half of 2018, while the iPhone 11 range was introduced last September.
IPhone SE, Apple’s most profitable phone, went into mass production in late March and suppliers were asked to build around 11 million units in late June, the sources said.
The four 5G-capable models Apple is now developing will come in three screen sizes: 5.4-inch, 6.1-inch and 6.7-inch, the sources said.
The development timeline for the high-end 5G model, which uses the 5G millimeter wave band and will be adopted by 5G networks primarily for the US market, is currently delayed by approximately two months. The other 5G iPhones, which support the Sub 6 Ghz band mainly used in China and South Korea, are one-and-a-half months behind.
The millimeter wave, or mmWave, offers lower latency for data transmission and faster speeds than Sub 6 Ghz, but it is more difficult to develop for a smartphone as more antennas need to be packed into a smartphone.
Apple completed most of the Engineering Verification Tests, or EVTs, for 5G phones in late June, about a month later than usual, people familiar with the progress told Nikkei. EVTs are necessary for new devices to show that a design can indeed become an end product. Nikkei learned that other tests necessary for the new iPhones to go into mass production have not yet been completed, including design verification tests and product verification tests.
EVTs will normally be completed in late May for mass production to begin in late August or early September, the sources said.
Apple shipped a total of 191 million iPhones in 2019, down 8.5% from the previous year for its second consecutive year of decreased shipping, according to IDC data.
By 2020, the U.S. company is expected to ship around 184 million units of iPhones, a 4% decrease from the previous year due to the impact of the coronavirus and delays in production of some iPhone models, said Jeff Pu, an analyst. from GF Securities.
However, shipments from Apple’s two biggest rivals, Samsung and Huawei, are forecast to drop even more severely, by 15% and 19%, respectively, from a year ago, according to data from GF Securities.
“The double-digit decline for Huawei’s smartphone business is inevitable, as the company does not offer Google Mobile service in foreign markets due to US crackdown … (…) The Samsung side it is because Covid-19 met market demand, “Pu said.
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