Apple Pushing Suppliers to Narrow 5G iPhone Production Delays

Apple is pushing its suppliers in China to work overtime and narrow production delays as it races to mass-release its first round of 5G-enabled iPhones.
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Apple  (AAPL) - Get Report is pushing its suppliers in China to work overtime and narrow production delays as it races to mass-release its first round of 5G-enabled iPhones amid the still-ongoing coronavirus pandemic.

Apple is facing delays of between four weeks and two months for mass production of the four models in its 5G lineup after postponements caused by factory lockdowns and workplace absences during the pandemic, the Nikkei Asian Review reported.

However, Apple has been pushing its suppliers aggressively to make up for lost production time through the pandemic, which shuttered most of China’s economy from the Chinese Lunar New Year through March, encouraging its suppliers to work overtime, the Nikkei said.

The development schedule for the top-end 5G model, which uses the millimeter wave 5G band and will be adopted by 5G networks mainly for the U.S. market, is currently around two months behind schedule.

Apple earlier this year set an aggressive target for the launch of 5G iPhones by ordering components for as many as 100 million units for 2020. But because of Covid-19 it has lowered the volume to around 80 million units, and could make further adjustments depending on market demand, sources told the Nikkei.

The pressure-tactics are working. According to the newspaper, Apple is less likely to face the worst-case scenario of postponing the launch of its 5G phones until 2021, given how its suppliers have responded.

"What the progress looks like now is months of delay in terms of mass production, but Apple is doing everything it can to shorten the postponement,” a source quoted by Nikkei said.

Apple shipped a total of 191 million iPhones in 2019, a drop of 8.5% from a year ago for its second consecutive year of shipment decline, according to IDC. Analysts expect the company to ship around 184 million units of iPhones in 2020, though only a fraction of those are expected to be 5G-enabled.

Digitimes reported on Tuesday that Apple plans to ship just 15 million to 20 million mmWave-enabled 5G iPhones this year, down from previous estimates of 30 million to 40 million.

Shares of Apple were up 0.29% at $365.86 in trading on Wednesday.