Apple (NASDAQ: AAPL) is asking its suppliers to produce between 70 million and 80 million units of the next iPhone by Dec. 30, with 4.7-inch and 5.5-inch displays, according to the Wall Street Journal. That volume would represent the largest ever for an iPhone launch and could indicate the demand Apple is expecting for its first iPhones with displays that would match the larger ones common on other smartphone platforms.
The report, which cited unnamed sources, said that the initial production run for the next iPhone, widely expected to be called the iPhone 6, is going to be considerably larger than the order last year of between 50 million and 60 million versions of the iPhone 5s and 5c. This year's new models with larger screens are expected to sport metal cases similar to the iPhone 5s and likely will come in multiple colors. The iPhone 5s and 5c have 4-inch diagonal screens.
Reports have swirled for months that Apple is readying iPhones with larger screens, though there has been speculation that the larger 5.5-inch displays might not be ready in time for the expected launch this fall. According to the Journal, Apple's display partners are struggling to improve the production of the 5.5-inch screens because the displays are using in-cell technology, which allows the screens to be thinner and lighter by integrating touch sensors into the LCD layer itself.
Apple has asked its component suppliers to make up to 120 million new iPhones by the end of the year to counteract the potential for a higher failure rate in the displays. Apple made a similar request last year to prepare enough parts for a combined 90 million iPhones to ensure it had enough supplies, the report added. Apple has also been rumored to be using sapphire crystal displays to make the screens on the iPhone 6 more durable, which could complicate the production.
The industry has long been anticipating Apple's move toward larger iPhone screens. According to an April 2013 document released as part of Apple's patent-infringement trial against Samsung, Apple concluded that "customers want what we don't have," and it pointed specifically to phones that have screens larger than four inches.
Further, 98 percent of Android smartphones sold in May of around $400 or above had a screen size larger than 5 inches, according to Counterpoint Research data cited by the Journal. And according to a survey conducted by Accenture that was released in June, fully 40 percent of Americans planning to buy a smartphone this year would prefer a phablet--a smartphone with a screen of between 5 and 7 inches--instead of a smaller phone. That number among Chinese survey respondents shot to 66 percent.
Indeed, China has emerged as a major market for Apple, especially after Apple added China Mobile, the world's largest carrier, as a partner in December. China Mobile currently counts around 790 million customers.
According to the Journal, some Chinese online retailers are encouraging customers to place preorders now to secure their new iPhone even though there is no new product to sell yet. One retailer even launched a site touting an unverified "exclusive introduction to the iPhone 6" in English using a template similar to Apple's official website. Further, more than thirty retailers on Alibaba's Taobao marketplace said they can help customers purchase the upcoming new iPhone 6 from the U.S. and Hong Kong, but customers have to pay a deposit ranging from around $80 to $1,288 to do so.
Apple will report its fiscal third-quarter earnings today after the market closes. Analysts are forecasting Apple will report sales of about 35.9 million iPhones for the three months that ended June 30, which would be up about 15 percent from the year-ago period.
- see this WSJ article (sub. req.)
- see this The Verge article
- see this separate WSJ article (sub. req.)
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