Apple Jumps On Nikkei Report Indicating A Boost In iPhone 11 Production

Around 1 am est., Nikkei broke several headlines detailing how Apple told suppliers to increase their production of the iPhone 11 by up to 10%, or up to 8 million units.

The news wasn’t directly released from Apple, but rather Nikkei cited unnamed sources: 

• APPLE INCREASES PRODUCTION OF IPHONE 11- NIKKEI CITING SOURCES 

• APPLE HAS TOLD SUPPLIERS TO INCREASE THEIR PRODUCTION OF ITS LATEST IPHONE 11 RANGE BY UP TO 10%, OR 8 MILLION UNITS – NIKKEI

The alleged ramp in production validates Apple CEO Tim Cook’s new plan to offer more affordable smartphones amid mounting macroeconomic headwinds in the global economy. 

“This autumn is so far much busier than we expected,” one source with direct knowledge of the situation said. “Previously, Apple was quite conservative about placing orders,” which were less than for last year’s new iPhone. “After the increase, prepared production volume for the iPhone 11 series will be higher compared to last year,” one source told Nikkei. 

Sources cited by Nikkei said the surge in iPhone orders is primarily due to increased consumer demand of the cheapest iPhone 11 model, while Apple has revised lower production rates for it’s more expensive, iPhone 11 Pro Max, which retails around $1,099.

Nikkei said Apple’s iPhone suppliers were cautious about Cook’s production increase of the cheaper model and reported that a higher level of orders wouldn’t be sustained. 

“Demand is good for now. But we have to be careful not to be too optimistic,” an executive-level source said in the report. “I hope that this year’s peak season lasts longer than last year.”

As a result of the good news, but not yet confirmed by Cook, Apple component manufacturers’ shares jumped in Japan.

Japan’s Minebea Mitsumi rose 3%, Japan Display added 2%, while Murata Manufacturing and Alps Alpine also saw gains to end the week.

European chipmakers AMS, Infineon Technologies, STMicro, and Dialog Semiconductor, saw their shares increase between 2% and 3.5% on the news. Gains were widely faded by the 7 am est. hour. 

Apple’s low-cost iPhone is a direct response to the imploding global smartphone market that is expected to contract for the third consecutive year, something that we mentioned last month.

Earlier this year, Cook finally acknowledged that Apple’s pricing of iPhones was a significant error that was slowing company sales, especially in emerging markets. 

Earlier this week, Cook told the German newspaper Bild that the iPhone 11 launch had a “very strong start.”

On iPhone 11 launch day [Sept. 20], one social media star was able to walk in and out of an Apple store in Manhattan’s SoHo district in about under 5 minutes. So much for the “very strong start,” which several years ago, people were waiting hours for these phones.

Yasuo Nakane, head of global tech research at Mizuho Securities, told Nikkei that he revised up 2019 iPhone production to about 194 million units from 178 million. He said this year’s sales are far below the 208.8 million iPhones sold in 2018.

In past reports, we’ve shown Apple is losing its global dominance, being displaced by Chinese brands, like Huawei, Oppo, and Vivo. Apple suffered a 25% decline in iPhone shipments in 1H19, according to IDC.  

While Apple has declined to comment on the unconfirmed report, its shares are up 1.55% around the 7:45 am est. This is nothing more than a classic stock market pump job by Cook, and we all know what could happen next.