Apple has a plan to exit the crisis coronavirus, crazy and unexpected, but it could work. Or not work. The chances are about equal – but Apple increases iPhone production, from March 2020 to March 2021 they will produce 4% more than in 2019/2020. Whatever the demand. Even if you have to increase the storage capacity. In the case of the most probable (according to experts) the outcome of this adventure will cause Apple a huge financial loss – but even in a worst case, the company will not kill you. But, if you think any other plan would have led to even worse results.
Apple adopted the decision applies not only to iPhone, but about the other aspects of no precise information. And it was not a spontaneous at a meeting of Apple’s top managers “insanely great idea”. Everything is much more serious: a reaction to a real threat of irreversible degradation of the chains of component suppliers. Already felt the first symptoms – Foxconn and Pegatron announced a reduction of personnel (only temporary employees) and stopped hiring.
Since April 10, was not overtime work, the pressure on staff is reduced. It’s more drastic measures – demand for smartphones (and other tech toys) falls, the causes of its fall are obvious – and they are still relevant. In the near future, better just would not, rather the contrary.
Why Apple increases iPhone production
Apple’s plan is incredibly bold and completely crazy. The entrepreneur, even if it is only going to take, knows what to do when demand falls, and falls for a long time: to reduce production, reduce staff, look for other areas of self-realization or even close the company to ride out bad times with minimal losses. Crises come and go, after their departure the demand is greater than ever. Survivors return to normal life and his will.
But all this will happen, sometime. So far it’s all bad. In the industry of mobile devices especially. People not to gadgets. But sooner or later the trouble will go away. Or, at least, the virus is brought under control and the economy will return to normal operation, under strict precautions. But insecurity and reduced income will be in the past, and all of these “electronic things” will again be in demand. They will buy up like ice-cold lemonade on a hot day. But who, where and how will all this produce? In the absence of orders with industry same way that a living organism deprived of access to oxygen.
Most likely, not only the leadership of Apple came up with the saving idea of support is vital to the well-being of the company supply chain, for which the reconstruction would take years and a lot of money, and something would have been irretrievably lost. Not all are able to decide on it, and not all have money for it. This is how to move from skyscraper to skyscraper blindfolded by a thin wire at a great height. Without insurance.
Sales of the iPhone in 2020
The media have repeatedly reported that Apple is no longer the “iPhone company”, but this is just hyperbole. In 2019 on sales of the iPhone, Apple has earned 51% of its revenue. The share of iPhone in the structure of revenues in recent years has fallen, a couple of years ago, iPhone brought Apple two-thirds of its revenues, now the iPhone is only half. Apple is still “the iPhone company”, not so long ago, readers were hotly debated in the comments in our channel at Yandex.Zen.
2020 high hopes. 5G, ToF (LiDAR), 5-nm system-on-chip, and something about it outside the company no one ever heard from March 2020 to March 2021 Apple planned to sell 220 million iPhones, at least. Need a supply chain capable of withstanding this load and even cope with the additional numbers. Hundreds of thousands of experienced, trained and proven professionals. Able to provide quality products that meet the high requirements of Apple. In March, Apple and Foxconn and Pegatron almost fully restored production faster than other companies. This is a very valuable resource to Apple, the loss is totally unacceptable.
When the crisis had just begun (and not yet unfolded in all its power), the experts came to the conclusion that Apple’s sales will be 10% lower than planned. Less than in 2019. It has in the past, now the expected drop in demand of 20% or even 25%. It is dangerous for “chain of suppliers”, as hypoxia to humans.