Apple Inc (NASDAQ: APPL) opened Tuesday’s trading with strong gains, rising nearly 4% within just a few hours.
The strong gains came on the back of a report which said the California-based company is planning a significant increase in its iPhone manufacturing in order to meet an anticipated surge in demand in 2021.
Japan’s Nikkei business newspaper reported that the tech giant has instructed suppliers to manufacture approximately 230 million iPhone handsets in 2021. This would represent a 30% increase from the pre-pandemic rate of 2019, with approximately 96 million set to be produced in the first six months of the year.
iPhone 12 Success
Launched just a few months ago in October, the iPhone 12 has been a success. The first day iPhone 12 preorders equaled 2 million, up from the 800,000 units for the iPhone 11 in the comparable period last year.
Since then, the iPhone has caught the imagination of the public with an estimated 80 million expected to be sold by the end of the year. This number is slightly higher than the 75 million estimated at the end of October.
According to some analysts, Apple is entering a super-cycle. The ‘super replacement cycle’ is expected to see between 350 million of the 950 million active iPhone models to be replaced.
Bright Outlook
After posting two successive years of smartphone shipment declines in 2018 and 2019, the first three quarters of this year saw its shipments stand at approximately 116 million iPhones, down just 1% on the year.
An executive at a key Apple supplier told Nikkei:
“The planned production for the next quarter and the following quarter have been decided and the outlook is quite bright.”
“The iPhone 12 Pro, and iPhone 12 Pro Max are especially stronger than we estimated, while the demand for iPhone 12 is in line with the forecast, but iPhone 12 mini is a bit sluggish.”
When talking about the final quarter of the year, the demand for new products from major customers is better than expected and that the current capacity utilization rate surpasses 100%.
Another reason for a brighter outlook is the Chinese economic recovery. Although the U.S. still counts for around 40 percent of Apple’s net sales, China is a key market to Apple. The Greater China market is the third-largest market for Apple, behind the Americas and Europe.
Apple Inc (NASDAQ: APPL) Stocks Higher
At the time of writing, Apple Inc (NASDAQ: APPL) stock is 3.33% higher, trading at $125.84. The stock is down from an earlier session high at $126.89.
Ove the last six months Apple Inc (NASDAQ: APPL) stock has risen around 47%..
Wedbush analyst Dan Ives said in a report last week that Apple Inc (NASDAQ: APPL) stock could rise by 32% next year as the company which reported an operating income of US$66.288 billion in 2020 is on course to comfortably beat previous records for sales of its iPhone in 2021.
Wedbush wrote:
“With more order activity kicking in over the last few weeks for iPhone 12, our initial reads are very bullish and give us incremental confidence in our supercycle thesis on iPhone 12.”
“We have not seen a launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis.”
