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Apple to go all in on 5G for its 2022 iPhone lineup

New phones, MacBooks, AirPods to enter production next month

Apple is going all in on 5G for its iconic iPhone lineup next year as it looks to boost sales.   © Reuters

TAIPEI -- All iPhones released next year will be 5G-capable, including Apple's first revamp of its budget handset in two years, as the company looks to boost sales of a product that still accounts for more than half of its revenue.

Apple will not introduce any new 4G models next year, sources familiar with the matter told Nikkei Asia, and will instead begin selling a version of its cheapest handset -- the popular iPhone SE -- that is compatible with the next-generation communication standard.

The company will also not introduce an updated version of the iPhone Mini next year, after the premium smartphone with a smaller screen failed to catch on with consumers, sources added.

The budget 5G iPhone is set to hit the market as early as the first half of 2022, sources briefed on the matter said. It will be powered by Apple's own A15 processor -- the same chip that will go into this year's premium iPhones -- and its 5G connectivity will be enabled by Qualcomm's X60 modem chip, they added.

Apple was a latecomer to the 5G race. Samsung Electronics, Oppo, Xiaomi and Huawei Technologies had all introduced 5G-capable phones by 2019, while the first 5G iPhone came out in 2020. The planned revamp of the iPhone SE next year will give Apple a full range of 5G offerings.

Like previous SE models, Apple's budget 5G iPhone will look like a refreshed version of the iPhone 8 and have a 4.7-inch liquid crystal diode (LCD) display, rather than the more advanced organic light-emitting diode (OLED) display, according to four people familiar with the plans. Apple used only OLED screens for its first 5G range, the iPhone 12, released last year.

The iPhone SE, introduced in 2016, has been a volume booster for Apple in terms of sales thanks to its relatively low price. The most recent version, released in April 2020, started at $399, while the iPhone 12 Mini -- the most affordable among last year's premium iPhone range -- was priced at $699.

Sales of the iPhone 12 Mini, by contrast, have disappointed. Apple introduced the 5.4-inch model last year but slashed production orders for the first half of 2021 after demand was lower than expected. The company has also scaled back production plans for this year's Mini model compared with last year, sources said.

Next year, the iPhone Mini will be replaced by a new version of the 6.7-inch iPhone Pro Max. This means the number of premium iPhone models released in the second half of 2022 will remain constant at four -- two 6.1-inch handsets and two 6.7-inch ones -- according to multiple sources.

"It is pretty much decided that there won't be a Mini next year, and there will be a relatively cost-effective version of the largest iPhone Pro Max instead. However, the designs for the detailed specifications for the four new models next year are not yet locked in," one of the people with direct knowledge of the matter told Nikkei Asia.

In addition to shuffling its iPhone lineup, Apple has also been preparing updated versions of other products for release in the second half of 2021 in hopes of tapping an expected economic recovery from the coronavirus pandemic. These include MacBook Pros and a new version of AirPods, the company's popular wireless earbuds, which will start production next month.

Mass production of this year's new iPhones is also set to begin in August, in line with Apple's usual pre-pandemic production schedule. Apple could produce as many 95 million units between then and the end of January, though sources stressed that such forecasts are subject to review. For all of 2021, Apple aims to build up to 230 million iPhones, including both the existing and new models, an 11% growth from last year, sources told Nikkei Asia.

Apple declined to comment.

Jeff Pu, a veteran analyst with Haitong International Securities, told Nikkei Asia that his agency expected Apple could ship 231 million iPhones this year and 240 million next year.

"We don't see revolutionary changes for Apple's iPhones next year. But with more models and better product planning, and specifications for next year, we do expect Apple's iPhone shipment could at least be in line with the global smartphone phone market recovery," Pu said.

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