Apple’s planned iPhone production boost may be hampered by the spread of the coronavirus in China.
According to a new report from Nikkei Asian Review, Apple has asked all its manufacturers to produce 80 million iPhones in the first two quarters of 2020. The Cupertino company has already scheduled orders for up to 65 million old iPhones and around 15 million orders for a new cost-efficient variant (iPhone 9 or iPhone SE 2), which Apple will launch early 2020.
However, due to the rapid and ongoing coronavirus outbreak that is spreading throughout China, many Apple suppliers are now preparing for potential disruptions that could derail certain products like the more affordable iPhone that is expected to be released within a couple of months.
“Suppliers warned that the blistering pace of production could be complicated by the outbreak of the coronavirus in China’s Hubei Province, given that their main manufacturing centers are in nearby Henan and Guangdong provinces, which had more than 100 confirmed cases as of Monday afternoon, and in Shanghai, with over 50 confirmed cases,” reads the report.
“The [coronavirus] situation in China could affect the planned production schedule,” one supply chain executive, whose trip to China has been postponed due to the virus, told Nikkei.
Terry Gou, founder of Foxconn, the world’s largest iPhone manufacturer, said last week that he was extremely concerned about the virus, and warned that its rapid spread, abetted by mass travel during the Lunar New Year holiday, could disrupt supply chains.
“We are considering whether or not to let employees return to China after the Lunar New Year holidays,” Gou told reporters last week in Taipei, a day before Wuhan was locked down and quarantined by Chinese authorities.
Apple, which raked in more than $142 billion USD in iPhone sales in fiscal 2019, has historically introduced lower-priced smartphone variants to woo budget-conscious shoppers and check declining sales of its biggest product category.
Last October, Nikkei reported that Apple asked suppliers to increase the production of the iPhone 11 by up to 8 million units, or about 10 percent, suggesting demand for the recently launched versions of its flagship phone was picking up.
Apple suppliers plan to begin assembling the low-cost iPhone next month and have been boosting overall iPhone production, explains the report. Apple expects iPhone sales to return to growth this year due to strong demand and aims to ship more than 200 million for the year.