Apple's Orders for iPhone 12 Components Complicated by Unclear Consumer Demand

Amid the ongoing pandemic in the United States and other countries, Apple is continuing to forge ahead with work on its upcoming iPhone 12 devices, which are expected to feature 5G connectivity, new 3D cameras, and other features.

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With travel restrictions to China, Apple is experiencing difficulties preparing for its new devices and placing orders for components, according to The Wall Street Journal, and one factor Apple is dealing with includes predicting consumer demand.

Apple's new iPhones don't come out until December, but production and preparations begin months in advance. Former employees who spoke to The Wall Street Journal said that Apple's operations team places orders for camera module and other components in March and April, with orders based on how many iPhones Apple expects to sell in a given year.

The orders that are placed dictate how many devices Apple makes, and with the ongoing pandemic, consumer demand "has never been more unclear." Millions of people are out of work and others live in fear that their jobs might not be available in the future, which could lead to cutbacks in new iPhone purchases.

The question of consumer demand looms large for Apple Inc. as it prepares to unveil a new low-price ‌iPhone‌ model and soon must begin ordering components for its latest flagship smartphones, which usually are launched in the fall.

The fall iPhones, which this year were expected to garner significant consumer interest because of the use of 5G wireless technology, make up a sizable portion of Apple revenue.

Many companies are struggling to determine consumer demand due to the lockdowns across the world, which have left businesses with many unknowns about what the future holds. If Apple over-orders and is stuck with extra expensive 5G modems or unsold 5G iPhones, it could cut into the company's profit margins.

Susquehanna analyst Mehdi Hosseini told The Wall Street Journal that Apple is likely having component suppliers make ‌iPhone‌ parts as planned, and that it will reassess demand in May or June. This is in line with reports from ‌iPhone‌ suppliers like TSMC that have said Apple has not cut orders at this time.

As Apple prepares to launch new iPhones this fall, it is said to be "scrambling" to prevent product delays, and there have been mixed reports in recent weeks with conflicting information on whether or not the ‌iPhone 12‌ will launch on time. As mentioned in earlier reports from Bloomberg and The Information, Apple's engineering team is conducting business using photographs and video calls for prototyping purposes. Apple has also allowed some engineers to take home prototypes of future products, which Apple has never previously allowed, all in an effort to continue work as usual.

Even if new 5G iPhones launch on time this fall, Apple could have a difficult time persuading customers to replace their old devices given the economic uncertainty. The low-cost ‌iPhone‌ that's in the works, which could be priced as low as $399, could be enticing, but it won't bring in as much money as Apple's much more expensive flagship devices. We'll likely learn more about Apple's plans and the current economic impact on the company's bottom line when it holds an earnings call later this month.

Related Roundup: iPhone 12
Buyer's Guide: iPhone 12 (Neutral)

Top Rated Comments

EugW Avatar
12 months ago
Apple's new iPhones don't come out until December, but production and preparations begin months in advance. Former employees who spoke to The Wall Street Journal said that Apple's operations team places orders for camera module and other components in March and April, with orders based on how many iPhones Apple expects to sell in a given year.
December?
Score: 10 Votes (Like | Disagree)
MacCurry Avatar
12 months ago
Demand will be known in an about a month. In the US COVID-19 mortalities are increasing to more than 1000 per day. Once NY+NJ slow down, then other hotspots will pick up like New Orleans, Detroit, South Florida, and others. By May 1st we could have over 35,000 dead. If that happens, unemployment will be nearly 1 in 3 people. Staying alive, healthy, and keeping a job will be the first priority.
Score: 10 Votes (Like | Disagree)
az431 Avatar
12 months ago

I'd have thought this was a bit obvious. A climate of fear isn't the best for making large purchases.
Was about to say the same thing. Guess it's a slow news day.


I'll save you from counting me. If this Covid-19 mess persists that long, count me as NOT upgrading for this year.
Apple comes on here every night to count potential future upgrades, so good thing you chimed in.


And this is why (among other reasons) I'm going to be buying the iPhone 9 either this month or next. Spending more than $500 on a phone right now (and in general) seems nuts. I work from home most days (minus coffee shops that are currently closed anyway) I always am sitting in front of my iMac or MacBook Pro. I'd rather buy a cheap iPhone with a great camera, and wait out this 4th version of the same design (that was never that great) while they figure out touch id through the screen and remove the notch (or at least slim it down).
You're in for a very long wait.
Score: 9 Votes (Like | Disagree)
bigcstyle4 Avatar
12 months ago
Even in normal times, they messed up by making the iPhone X essentially a perfect phone. I had every phone from the original and stopped at the X. None of the new features since then have been intriguing enough to increase my phone bill by $45/month for the next two years.
Score: 9 Votes (Like | Disagree)
Quu Avatar
12 months ago
I'm sure Apple will sell every phone they produce even if they have to store them for months. I mean they still sell the iPhone 8 guys. If the phone doesn't sell well and they still have stock in a year from its launch they could just sell them as the "old" iPhone like they do now with the iPhone 8.

And we shouldn't forget they're sitting on like 140 billion dollars I mean one bad year of overcommitting on production isn't going to even dent them.
Score: 7 Votes (Like | Disagree)
BlendedFrog Avatar
12 months ago
It's not just Apple. At this point, holiday shopping season is going to look very different. I highly doubt people are going to want an expensive phone this year when so many have been out of work for months on end.
Score: 6 Votes (Like | Disagree)

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