Despite record output, Foxconn unable to keep up with massive iPhone 6 demand
As preorders for the iPhone 6 and iPhone 6 Plus continue to pour in to the Online Apple Store, partner manufacturer Foxconn is reportedly having trouble keeping up with incredibly high demand despite reaching record output levels.
According to sources familiar with the supplier's operations, Foxconn has 100 dedicated assembly lines in Zhengzhou working around the clock in an attempt to meet preorders and launch day allotments for Apple's iPhone 6 handsets, reports The Wall Street Journal.
"We have been churning out 140,000 iPhone 6 Plus and 400,000 iPhone 6 every day, the highest daily output ever, but the volume is still not enough to meet the preorders," the unnamed source said. "For iPhone 6 Plus, we are still ramping up the production line. Another reason for the limited supply is the shortage of 5.5-inch displays."
One insider said 5.5-inch display yields are somewhere between 50 to 60 percent, meaning nearly half of all produced panels are scrapped as they do not meet Apple's strict standards. Retina HD displays bound for the 4.7-inch iPhone 6 are faring better with an output rate of about 85 percent.
Sources said Foxconn is responsible for manufacturing all iPhone 6 Plus models, as well as a "majority" of iPhone 6 versions. The report contrasts rumors from August that claimed Pegatron had won 50 percent of iPhone 6 orders, which at the time was said to be some 50 million units.
Reports from as late as July claimed Apple's larger 5.5-inch iPhone would not be ready in time to launch with the 4.7-inch iPhone 6, though Apple has put those rumors to bed and will debut both smartphones this Friday. Supplies for the "phablet" device appear to be constrained, however, as the larger phone was first to see delivery dates slip when preorders went live last Friday.
The stage is set for a record-breaking launch this week, as Apple on Monday announced combined iPhone 6 and 6 Plus preorders exceeded four million units within their first 24 hours of availability.
According to sources familiar with the supplier's operations, Foxconn has 100 dedicated assembly lines in Zhengzhou working around the clock in an attempt to meet preorders and launch day allotments for Apple's iPhone 6 handsets, reports The Wall Street Journal.
"We have been churning out 140,000 iPhone 6 Plus and 400,000 iPhone 6 every day, the highest daily output ever, but the volume is still not enough to meet the preorders," the unnamed source said. "For iPhone 6 Plus, we are still ramping up the production line. Another reason for the limited supply is the shortage of 5.5-inch displays."
One insider said 5.5-inch display yields are somewhere between 50 to 60 percent, meaning nearly half of all produced panels are scrapped as they do not meet Apple's strict standards. Retina HD displays bound for the 4.7-inch iPhone 6 are faring better with an output rate of about 85 percent.
Sources said Foxconn is responsible for manufacturing all iPhone 6 Plus models, as well as a "majority" of iPhone 6 versions. The report contrasts rumors from August that claimed Pegatron had won 50 percent of iPhone 6 orders, which at the time was said to be some 50 million units.
Reports from as late as July claimed Apple's larger 5.5-inch iPhone would not be ready in time to launch with the 4.7-inch iPhone 6, though Apple has put those rumors to bed and will debut both smartphones this Friday. Supplies for the "phablet" device appear to be constrained, however, as the larger phone was first to see delivery dates slip when preorders went live last Friday.
The stage is set for a record-breaking launch this week, as Apple on Monday announced combined iPhone 6 and 6 Plus preorders exceeded four million units within their first 24 hours of availability.
Comments
Yes, once again, Apple has "put to bed" the lies propagated by Apple Shorts. When will they lern?
"Reports from as late as July claimed Apple's larger 5.5-inch iPhone would not be ready in time to launch with the 4.7-inch iPhone 6, though Apple has put those rumors to bed and will debut both smartphones this Friday. "
Yes, once again, Apple has "put to bed" the lies propagated by Apple Shorts. When will they lern?
Frankly thought given the report dated back to July it is entirely possible that back then the yields were even lower and a launch was indeed looking at risk..
it is because Foxconn is making more phones for Apple's more profitable rival Samsung.
Frankly thought given the report dated back to July it is entirely possible that back then the yields were even lower and a launch was indeed looking at risk..
This.
Rumors should always be taken with a grain of salt, but when production is equaling almost 3:1 for 6:6+, it's very likely they considered holding release an extra few weeks to have more on hand.
If they are still ramping up then the monthly total might end up being higher but with these numbers, they'd only manage 50m for a full quarter, which is around the same as Apple's highest ever iPhone quarterly sales.
The ratio is interesting as the 6+ is around 1/3 the 6 so that gives an idea of their expected demand for each, even though the 6+ output is increasing. I expect the 6+ to get a lot higher volume initially than its sustained volume because the few who have been waiting for it will jump on it immediately but once they have that model, it'll fall off sharply while the 6 sustains its sales volume throughout the year. Apple of course won't break down the numbers, they'll lump all 4 models together.
There was a mention of the quality testing on the initial run. If they started production 3 months in advance to build up a supply of 50m phones, they might have built 50m defective phones. If they spot any major issues in the initial say 10m unit run then it's far less of an expense to fix. The 'out of stock' message also drives demand, which is why their competitors have claimed it's done on purpose but they just wish they had the same kind of demand. The truth comes out in their earnings and Apple always backs up the suggestions of overwhelming demand.
One of these concerns is better than the other!
I'm a little curious about who is scrutinizing 140,000 or so screens a day and finding them wanting...
how much of that can be automated, I wonder? Seems like that might be a stricture in itself.
The ratio is interesting as the 6+ is around 1/3 the 6 so that gives an idea of their expected demand for each, even though the 6+ output is increasing.
It's hard to glean anything useful from those figures, isn't it? Is the ratio 1/3 because of difficult assembly and low screen yields, or because that (plus whatever increase they manage in the coming weeks) is all Apple expects to sell?
Apple of course won't break down the numbers, they'll lump all 4 models together.
Which is unfortunate only because that will lead to endless arguing here over whether the Plus is actually popular or not. It'll make the spats over the 5C look like a polite handshake.
I don't understand why Apple does not start manufactering earlier.
The main reason not to start early is to avoid leaks. But who cares at this point? You can stop the leaks so why not start production 3 months ahead of launch?
I'd think the "main reason" would be to present the most advanced and polished product possible.
Despite what they say about security, I don't really see the endless buzz hurting Apple… especially given the fever-pitch
resulting by the time the products arrive.
Not sure they'd make the 6 o'clock news so many nights around the release, otherwise.
I don't understand why Apple does not start manufactering earlier.
The main reason not to start early is to avoid leaks. But who cares at this point? You can stop the leaks so why not start production 3 months ahead of launch?
Because the manufacturing output is limited by the least available component at the time. It's no use beginning production 3 months ahead of launch if the company making the screen can only produce half of your daily output. Might as well stock inventory of the screen for 1 1/2 months and start production 1 1/2 months before launch. You would have the same amount of phones built at launch.
Apple always seems to be held back because of manufacturing capacity.
Something that should concern analysts.
If manufacturing is stuck at 60-65 million units per quarter then that's the limit to Apple's sales... for ever and ever... unless Cook can figure out this problem.
Nobody expected the 5c to sell more, people said few would buy the 5c because the 5s was only $100 more and the gold model looked great. Surveys before the iPhone 5s arrived showed demand at 10:1 for 5s vs 5c, the estimation of actual sales from sales/ad tracking was about 3:1.
The surveys for demand of 6 vs 6+ have them both fairly even but phablets sell in fewer numbers across all manufacturers.
Something to factor in will be popularity by region. Eastern countries seem to prefer larger phones more but also prefer cheaper phones so it's not clear how well an expensive, large phone will work out there.
Yeah that's gonna happen. Both models are selling out so the one thing we can be sure of is that the current output volume for both models is too low.
It wouldn't necessarily mean sales would be any higher over the long-term if they ramped up faster though, they could dip down further in a future quarter. You'd have to assume that people who can't get one are buying something else instead. Not everyone feels the need to buy at launch as it depends on their contracts, disposable income, desire to upgrade and so on.
It wouldn't necessarily mean sales would be any higher over the long-term if they ramped up faster though, they could dip down further in a future quarter. You'd have to assume that people who can't get one are buying something else instead. Not everyone feels the need to buy at launch as it depends on their contracts, disposable income, desire to upgrade and so on.
That really doesn't have anything to do with what I was saying.
If Apple is constrained because of manufacturing capacity then that's a known limit. Known limits are not viewed favorably in the investment world (well, nothing is, actually... but let's not make it worse).
I wouldn't say Apple is constrained. Launch demand is a spike. Apple has the capacity to make every phone the market wants to buy over the entire year.
So... you are saying that "if" Apple were to need 75 million per quarter, for 2 quarters, then they could be made... no problem?