Apple iPhone 5 Production Ramps Up

  on August 19 2011 9:22 AM

Apple is prepping for a bigger iPhone market in this second half of the year analysts say, ramping up the orders of its current iPhones and also stepping up production of the anticipated iPhone 5.

Apple's total order volume for the iPhone 3GS, 4 and next-generation iPhone 5 has increased to 56 million units, according to Digitimes, representing an increase of nearly 13 percent of previous estimates.

The site, citing Taiwan-based supply chain makers, says that Apple lowered the iPhone 5 orders from seven million units to 5.5-6 million units, while fourth-quarter orders have been raised from 14 million units to more than 20 million units.

While Taiwan-based supply chain makers will benefit from increased component orders, they are expected to see pressure for price cuts from Apple, especially touch panel makers, which account for the largest proportion of total production costs, the sources said.

The iPhone represents Apple's flagship smartphone, and has propelled Apple to become the largest smartphone vendor in the world.

Apple's old iPhone 4 , already 12 months old, is surprisingly still selling strongly at U.S. carriers.

At AT&T, the iPhone is the most recommended device,  while the Samsung Infuse and the HTC Inspire 4G top the list of Android models pushed. But the iPhone sales beat non-iPhone sales, outstripping Android and other non-iOS devices by a margin of two-to-one.

Non-iPhone sales dominated Verizon, however, giving the two carriers 7.1 million non-iPhone sales and 5.9 million iPhone sales respectively.

But data is pointing to not just one follow up, but two releases of the iPhone 5, if Wall Street is to be believed, meaning one phone would come in the fourth quarter, and one shortly after.

The first one is set to come within a few months, analysts predict, but there is one glaring missing feature -- 4G high-speed network access. This should come early next year.

[W]e continue to pick up indication that it will not likely incorporate 4G LTE due to battery life issues and spotty network coverage, said Sterne Agee's Shaw Wu. And ironically, if anyone is in a position to fix these weaknesses, it would be AAPL.

But there is still plenty of reason to pick up the iPhone 5 when it comes later this year, he contends.

Well, it turns out that we are picking up that this 'interim' iPhone refresh in the Fall timeframe could be a bigger upgrade than we expected, said Wu, referring to chatter he's detected from supply chain checks.

He writes that in addition to a dual-core microprocessor, the next iPhone could sport a slightly larger display, largely ignoring the other rumors of the device being razor thin or particularly wider.

Whether everyone buys in immediately, or waits for the upgrade later, Wall Street is anticipating enough interest to boost Apple's numbers this year.

BMO Capital Markets analyst Keith Bachman raised his outlook price target to $465 from $450 on higher estimates for Apple's sales of the iPhone.

The analyst expects continued strength for Apple in smartphones, with more carrier relationships and share gains in CDMA phones this fall, once the next version comes out of the iPhone, which he dubs the iPhone 4S.

Bachman notes that Apple should increase its iPhone sales this year by 1.5 times the rate of growth of the smartphone market, because it's still signing up new carrier partners.

Apple has already out sold and out profited smartphone rivals in the second quarter this year, using phones it introduced at least a year ago.

Research firm IDC said Apple sold over 20 million units in the second quarter, with Samsung coming in at No.2 with 19 million units sold.

 

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