Apple expects iPhone sales to be sustained in 2022 as the market slows

Apple Inc. has asked suppliers to build at least as many of its next-gen iPhones this year as they will in 2021, expecting an affluent clientele and dwindling competition to weather a global electronics industry downturn.

The tech giant is asking its assemblers to manufacture 90 million of its latest devices, in line with last year’s levels, despite worsening forecasts for the smartphone market, according to experts familiar with the matter. The Cupertino, California-based company still expects to assemble a total of around 220 million iPhones for 2022, also around the same level as last year, according to one of the people.

Apple’s forecasts, a closely guarded secret, suggest the company is confident of weathering a slump in spending on smartphones and other devices. Mobile device makers have started freezing orders, China’s biggest chipmaker warned on Friday. The global mobile phone market, which slumped 9 percent in the June quarter, is expected to shrink by 3.5 percent in 2022, according to IDC.

Apple supplier stocks in Asia rose on the news. Taiwanese iPhone assembler Pegatron Corp. jumped as much as 3.6 percent in its biggest gain in five weeks, while Japan Display Inc. posted its biggest two-month gain of 5 percent. TDK Corp. rose 5.3 percent and Murata Manufacturing Co. rose 3.7 percent.

At a time when Android devices are suffering, the increased demand for Apple’s new lineup comes from a customer base still willing to spend on premium gadgets, people said. The virtual demise of Huawei Technologies Co. has also eroded competition in high-end smartphones.

Hon Hai Precision Industry Co., which makes the most iPhones in the world, hinted at Apple’s resilience when it said this week sales of its smart consumer electronics products should be little changed in 2022. An Apple representative declined to comment.

The world’s most valuable company has vowed to be disciplined on spending as economic and geopolitical uncertainties cloud the outlook for 2022 and beyond. Bloomberg reported last month that Apple will slow spending and hiring for some of its teams in 2023.

This week, a cooler-than-expected US inflation rate fueled hopes that rate hikes will not be as aggressive as feared. However, market observers warned that the economic outlook remained bleak.

Still, Apple is pushing ahead with plans for its marquee device, which accounts for about half of its sales and is the main gateway to profitable services.

According to Bloomberg News, Apple will launch four new iPhone models that it hopes will break more ground than the 2021 versions. The iPhone 14 Pro models are expected to feature a much-improved front camera, a new rear camera system with a 48-megapixel sensor, thinner bezels, a faster A16 chip, and a redesigned notch with a pill-shaped cutout for Face ID and a hole punch for the Camera.

Leading up to 2021, Apple had maintained a steady level of around 75 million units for the first run of a new device through the end of the year for the past several years. It raised its target to 90 million for 2021, reckoning that the first new iPhone since the launch of Covid vaccines would spark additional demand. The company, whose iPhone assembler Pegatron Corp. owned, posted record sales and profits this fiscal year.

The iPhone should fuel Apple’s growth again this year. Apple’s iPhone and iPad performed better than feared in the June quarter, although other products — including Macs and wearables — underperformed forecasts. Services, a key growth area for Apple, just missed estimates.

Apple does not seem to be seeing any meaningful impact on its iPhone business in the current macro environment, analysts at Piper Sandler wrote after the results. Apple expects iPhone sales to be sustained in 2022 as the market slows

Fry Electronics Team

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