Apple plans to increase production in the first half of 2021 by 30% over the same period in 2020, Nikkei Asia reported. Mac production growth, including MacBook Pro and iMac Pro, could also be higher.
Apple (AAPL) shares surged 5% on Tuesday to a three-month high as investors received optimistic news about the company’s plans to boost production for its iPhone and Mac.
Authoritative Nikkei Asia on Tuesday said, citing anonymous sources, that Apple has ordered its suppliers to produce about 230 million iPhones next year, up 30% from pre-2019 rates, while for the first half of the year about 96 million are planned. These production plans include both the new iPhone 12s with 5G and older models.
According to an anonymous vendor, demand for “the iPhone 12 Pro and iPhone 12 Pro Max is particularly strong than we anticipated, while demand for the iPhone 12 is in line with forecasts, but the iPhone 12 mini is a little sluggish.”
According to the source, next year, a tighter production and delivery schedule will be observed in the segment of Apple’s high-performance computers, including the MacBook Pro and iMac Pro.
Apple’s largest supplier Foxconn Technology Group (FXCNY) said last month that its sales will grow by about 10% in 2021 amid what it sees strong demand for consumer electronics in general and the iPhone 12 in particular. Apple typically accounts for about half of Taiwan’s Foxconn’s annual revenue.
At the same time, analysts warn that Apple’s production plans may change, with an adjustment to current demand, in addition, serious problems with a lack of spare parts may prevent their implementation.
So, not only Apple plans to increase supplies – the Chinese smartphone manufacturer Xiaomi intends to increase production in 2021 to 240 million, which could aggravate the shortage of spare parts in the industry. Like its counterparts, Xiaomi is trying to expand its overseas presence as Huawei retreats from the US market due to US government sanctions.
Apple shares have posted strong gains of 74.2% YTD, outperforming major US stocks.
The growth was largely driven by expectations for the new iPhone 12 lineup with 5G and other innovations. The spike also came after the Apple stock split in early September, but since then until Monday’s close, the stock is down 9.2%.
Wedbush Securities analyst Daniel Ives, a longtime Apple supporter, said the Nikkei report is an upbeat signal for investors and confirms his forecast of a strong “super cycle” for older iPhones and strong demand for iPhone 12. He estimates between 350 million and 950 million old iPhones are in the potential upgrade segment.
Ives reaffirmed his outperforming (worse than buy, but better than holding) rating for Apple stock with a target price of $ 160 (the highest among analysts), while raising the target price maximum to $ 200.
The analyst believes that in 2021 Apple will see an increase in iPhone demand in both the US and China, after two years of declining iPhone sales.
Apple factory strike in India
On Tuesday, one of the world’s leading suppliers, Apple Wistron, reported a mass riot strike at its iPhone factory. The damage is estimated at about $ 7.12 million, although a much larger amount was originally named at $ 60 million.
It is not known exactly what proportion / size of iPhone production falls on this plant. The strike was reportedly prompted by demands for wages and improved working conditions. Apple has deployed employees and auditors to the plant and is working with local police to investigate the strike.
Apple aims to reduce its dependence on suppliers from China, but there have been cases of labor violations with both Chinese and Taiwanese suppliers.