Apple Aims to Keep iPhone Shipments Steady Despite 2023 Turmoil

Apple Inc. is asking suppliers to produce about 85 million units of the iPhone 15 this year, roughly in line with the year before, according to people familiar with the matter.

The Cupertino, California-based company is aiming to hold shipments steady despite tumult in the global economy and a projected decline in the overall smartphone market. It’s likely to increase revenue overall because Apple is considering raising the price for Pro models, said the people, asking not to be named because the targets aren’t public.

The fortunes of Apple, the world’s most valuable company, reverberate through the global economy, driving business for thousands of suppliers and fueling employment for millions from the US and China to Vietnam and India. Its shares have surged almost 50% this year, pushing its market capitalization to $3 trillion.

Apple and its rivals are grappling with sharp declines in demand for electronics from smartphones to computers, as corporations and consumers held off on purchases in the face of surging prices and economic uncertainty. In the US, the Federal Reserve is expected to raise interest rates again this week to fight inflation, while China’s economy, the world’s second largest, lost steam in the second quarter.

Apple’s production schedule is closely scrutinized because of the company’s broad impact. From Samsung Electronics Co. to Taiwan Semiconductor Manufacturing Co. to Foxconn Technology Group, some of the world’s largest corporations depend on iPhone business to drive growth and margins. Apple said it would stop disclosing specific shipment numbers in 2018, in part to shift investor focus to more predictable businesses like its App Store.

This year, the company had to trim the forecast for its upcoming entry-level phones by about 2 million due to a production challenge with CMOS image sensors, but it compensated for the dip by adding orders for higher-priced Pro models, the people said.

There has also been a minor hiccup with the new iPhone screens, but the issue should be fixed within a week or two and it will not have a noticeable impact on overall production, one of the people said. The Information previously reported about the screen issues.

An Apple representative didn’t respond to an emailed request for comment. DigiTimes reported earlier that initial volumes for new iPhones may be 83 million to 85 million.

The company’s forecast of 85 million this year is slightly lower than the initial shipment target of 90 million Apple offered in the previous two years. But the US company wasn’t able to achieve those goals because of a chip shortage in 2021 and then prolonged Covid controls in China in 2022 that disrupted production.

Apple’s relatively steady fortunes contrast with struggles for several competing smartphone companies that build devices with the Android operating system.

Phone sales have declined for eight consecutive quarters, including an 8% drop in the June quarter, according to Counterpoint Research. Chinese Android brands Vivo and Xiaomi both suffered declines of more than 10%.

Counterpoint estimates that Apple’s sales slid 2% in the most recent quarter, but its market share rose to 17% because of continuing growth in demand for phones selling at $600 or more.

“Apple is riding this “premiumization” wave, reaching record shares in multiple new markets which are typically not considered its core markets,” Counterpoint analysts wrote in the report. “A prime example is India, where it grew 50% YoY in Q2 2023.”