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Apple ramps up production ahead of 5G iPhone debut

Long-awaited lineup to be unveiled in California on Oct. 13

Apple's long-awaited 5G iPhone is on due to be unveiled on Oct. 13 in California.   © Reuters

TAIPEI -- Apple and its key suppliers are ramping up production and working through holidays to make sure the long-awaited 5G iPhone range will hit shelves soon after it is unveiled on Oct. 13.

The two most important iPhone assemblers, Foxconn and Pegatron, have been running at full production speed during China's two most important holidays -- the Mid-Autumn Festival and the Golden Week holiday that follows its National Day -- Nikkei Asia has learned.

Initial production of the highly anticipated 5G iPhone began around mid-September, in line with Nikkei Asia's previous report, with more substantial production output starting in early October. Both Apple and its suppliers have been working hard for months to shorten the production delay caused by the coronavirus pandemic.

The production volume for the new 5G iPhone range could end up between 73 million and 74 million units for this year, Nikkei Asia reported, falling short of Apple's original orders for up 80 million units' worth of components due to production and development delays caused by the coronavirus outbreak. The production shortfall will likely be made up early next year, if sales are as strong Apple expects. Production of all the latest iPhones and the flagship 5G lineup remains in China, despite the tech industry's huge migration out of the country, Nikkei reported.

Foxconn said it does "not comment on any aspect of our operations or our work for any customer" as a matter of policy. "However, we can say that all holiday and overtime work arrangements carried out by employees in our facilities in China are entirely voluntary and they fully comply with all relevant laws and regulations."

Pegatron declined to comment on specific clients or products.

Apple last week sent out an invitation for an online press event on Oct. 13 to announce the release of the 5G iPhones, weeks after it hosted a virtual event to launch new iPads and Apple Watch and about one month later than it usually unveils its flagship iPhones.

The Cupertino-based tech giant is set to introduce four models of 5G iPhones with three screen sizes: 5.4-inches, 6.1-inches and 6.7-inches. All four of the phones will sport the most advanced organic light-emitting diode displays, which is mostly supplied by Samsung Display and LG Display of South Korea.

Two of the 5G iPhones -- the 6.1-inch and 6.7-inch models -- will come with high-end triple cameras, which will likely feature an artificial intelligence-powered object detection feature that could better enable augmented reality applications. The other two models will sport dual cameras like last year's popular iPhone 11.

The full 5G iPhone range will be powered by Apple's in-house designed A14 mobile processors, which are produced by Taiwan Semiconductor Manufacturing Co. using the Taiwanese company's latest 5-nanometer chip production technology -- currently the industry's most advanced.

The new iPhones will be the first smartphones in the world to use such advanced chips, following Apple's announcement in September that its new iPad Air will also boast the A14 chips. Apple will also not include a charger or wired earphones with its new iPhones, both to keep costs down and because many iPhone users already have these accessories.

Apple's launch of its flagship iPhones comes as its embattled rival Huawei Technologies -- which briefly overtook Samsung Electronics' as the world's leading smartphone maker by shipments in the June quarter -- announced it will launch its flagship Mate 40 smartphone on Oct. 22.

Huawei is battling an ongoing U.S. clampdown that restricts all suppliers, American or not, from using American technology to serve the Chinese tech giant unless they receive a specific license. This restriction has affected everyone from TSMC, Micron and Samsung to Sony, Qualcomm and Largan Precision, a high-end camera lens provider.

The Mate 40 models will be equipped with Huawei's in-house designed Kirin mobile processor, which, like Apple's A14 chip, is produced by TSMC using 5-nanometer technology. Because Huawei cannot receive support from unlicensed chip suppliers, however, the company's chip supply may run out. Huawei's Mate series usually competes head-to-head with Apple's new iPhones in the final quarter of the year.

Growing geopolitical tensions could also impact Apple's 5G iPhone sales in China if the Trump administration forces the company to remove popular Chinese apps like WeChat or TikTok from its app store. Meanwhile Beijing in September rolled out a set of rules for its "Unreliable Entity List," a list of foreign companies accused of treating Chinese companies unfairly. The Global Times, the mouthpiece of the Chinese Communist Party, previously hinted that Apple, Qualcomm and Cisco Systems could be among the potential targets of Beijing's retaliation.

While market watchers foresee more uncertainty for the smartphone market due to the pandemic and geopolitical tensions, they are hopeful of a recovery in 2021.

Luke Lin, an analyst with Digitimes, expects Samsung, Apple, Oppo, Vivo and Xiaomi to see healthy growth in smartphone shipment next year, while Huawei will see a significant decline due to the U.S. crackdown. Total iPhone sales will surpass 220 million units in 2021, from around 195 million units this year, and Apple will reclaim the No. 2 position in the global smartphone market, according to Lin's forecast.

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