TAIPEI / PALO ALTO, United States – Apple is pushing its suppliers to try and reduce production delays for their first iPhone 5G as the US tech company aims to limit the fallout from the coronavirus pandemic.
Apple experienced delays between four weeks and two months of mass production of the four models in its 5G range after postponements caused by factory lockouts and absences from the workplace during the pandemic, according to Nikkei Asian Review. Apple has focused heavily on the 5G range to help it against rivals including Samsung and Huawei Technologies, which introduced smartphones with 5G capability last year.
But sources say that Apple has aggressively tried to reduce delays and is now less likely to face a worse postponement scenario of the launch until 2021
The tech giant and its suppliers are working overtime to make up for lost time, people with knowledge of the matter said.
“What appears to be progress now is months of delay in terms of mass production, but Apple is doing everything possible to shorten the postponement. There is a possibility that the program may still be moving forward,” said one of the sources in Nikkei.
California, where Apple is based, was subject to “home shelter” restrictions in March, although the order was revised in June to allow more businesses to reopen. Part of Apple’s hardware development team returned to headquarters last month as the company attempted to speed up the final configuration of the new iPhones and remain as close as possible to the September release date, according to another source that is familiar with the situation.
“Some new product project deadlines have been moved since the hardware team started returning to the office,” said the source.
Apple’s decision to bring some employees back to the office sets the company apart from most of its Silicon Valley colleagues, highlighting iPhone manufacturers’ strong dependence on engineering and testing processes that are difficult to perform remotely.
Another source said the situation remained dynamic, although the company has set an aggressive schedule for suppliers. “Some final iPhone assemblies may be delayed in early October, and it would not be surprising if there were further delays because there are still many tests underway and the final plans have not yet been blocked,” said the person.
Apple declined to comment on the matter.
The company remains a sector in crisis, with millions of jobs in China directly or indirectly dependent on its shipping plans. Any changes to its programs are extremely significant for individual suppliers and would spill over the technological supply chain, with chain effects for other manufacturers.
Earlier this year, Apple set an aggressive target for the launch of the iPhone 5G by ordering components for up to 100 million units by 2020. However, thanks to Covid-19, it reduced the volume to around 80 million. units and could make further adjustments depending on market demand, people familiar with the matter said.
The target of 80 million units, which is on a similar scale to previous years, is still at a relatively healthy level, given that the coronavirus pandemic is weighing on 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 iPhone 5G line. These 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 over 45 million units of the older models for the second half of 2020, with the goal of protecting the company from delays in the new iPhone 5G, Nikkei sources said.
The order numbers are expected to reassure suppliers that Apple is confident that sales will be healthy despite the coronavirus pandemic. However, actual demand remains to be seen and the company may still adjust orders after the product launch.
The relatively affordable iPhone XR came out in the second half of 2018, while the iPhone 11 range was introduced last September.
The iPhone SE, Apple’s cheaper phone, went into series production in late March and suppliers were asked to build around 11 million units by the end of June, sources said.
The four 5G-capable models that Apple is developing will now come in three screen sizes: 5.4 inches, 6.1 inches and 6.7 inches, sources said.
The development program for the high-end 5G model, which uses the 5G millimeter-wave band and will be adopted by 5G networks mainly for the US market, is currently about two months behind schedule. The other iPhone 5Gs, which support the Sub 6 Ghz band used primarily in China and South Korea, are one to one and a half and a half behind schedule.
The millimeter wave, or mmWave, offers lower latency for data transmission and higher speeds than Sub 6 Ghz, but it is more difficult to develop for a smartphone, since it is necessary to insert more antennas in a smartphone.
Apple finished most of the technical verification tests, or EVTs, for 5G phones by the end of June, about a month later than usual, people familiar with the progress told Nikkei. EVTs are required for new devices to demonstrate that a design can actually become an end product. Other tests necessary for the new iPhones to go into series production, including design verification tests and product verification tests, have yet to be completed, Nikkei has learned.
EVTs would normally be completed in late May, so series production can begin in late August or early September, sources said.
Apple shipped a total of 191 million iPhones in 2019, down 8.5% from a year ago for its second consecutive year of shipping decline, according to IDC data.
By 2020, the US company is expected to ship approximately 184 million units of iPhones, a 4% drop from a year ago due to the coronavirus hit and delays in producing some iPhone models, said analyst Jeff Pu by GF Securities.
However, according to estimates by GF Securities, shipments of Apple’s two biggest rivals, Samsung and Huawei, are expected to fall even more severely, respectively 15% and 19%, compared to a year ago.
“The double-digit decline in the Huawei smartphone business is inevitable as the company does not offer Google Mobile service in overseas markets due to the crackdown in the United States …