iPhone part suppliers suggest demand for Apple’s phone is stabilizing

Apple’s iPhone component suppliers suggest demand for the Cupertino, California-based company’s premiere product will stabilize this year.

Bloomberg reports that people familiar with the matter say iPhone suppliers are preparing to produce components for as many as 75 million new iPhones in the second half of 2019.

Further, that number is roughly the same as a year earlier. This volume of iPhones for the next launch cycle suggests steady demand for Apple’s most important product, despite U.S.-China trade tensions and a declining smartphone market.

During last year’s holiday quarter, Apple stopped sharing iPhone shipment numbers as unit growth turned negative. Instead, it began providing metrics to highlight the growth of its services business, including platforms like Apple Music. Analysts estimate Apple sold between 70 million and 80 million iPhones in the second half of 2018.

Additionally, the people familiar with the matter told Bloomberg that suppliers are getting ready to produce components for three new iPhone models to meet holiday-season demand. They also said that suppliers could increase production to 80 million new phones if needed.

However, Apple’s suppliers planning to produce parts for 75 million iPhones doesn’t mean the company will sell that many. Apple will assess sales after launch and reduce iPhone shipments if necessary.

Bloomberg points to weak smartphone demand and Chinese rivals like Huawei gobbling up market share as factors that could lead to reduced shipments. Further, the trade war has dented Chinese economic growth and soured consumers on American brands like Apple.

Apple is relying on services to make up for slackening sales, but the iPhone is still its most significant revenue driver. Plus, the company has to get the device into users’ hands so they can download and subscribe to new services.

And to get devices into customers’ hands, Bloomberg says it’s all about the upgrades. According to rumours about the 2019 iPhones, significant new features include enhanced cameras, with the iPhone XS and XS Max successors sports three rear cameras and the iPhone XR replacement including a second rear camera. Further, all three models will sport the faster A13 processor built by TSMC.

Unfortunately, the new iPhones will look similar to the 2018 models, which in turn looked like the 2017 iPhone X. Blooomberg reports Apple plans a more extensive revamp of the iPhone for 2020, which will feature an updated design, 5G connectivity and new augmented reality cameras.

Speaking of 5G connectivity, Apple has purchased Intel’s smartphone modem business, which will let the company produce its own 5G modems rather than rely on Intel as its sole supplier. However, analysts say it could take as many as three years before Apple’s in-house modem is ready.

Source: Bloomberg