UPDATE 2-Apple raises production of iPhone 11 models by about 10% - Nikkei

Apple Inc has asked suppliers to increase the production of its iPhone 11 models by up to 8 million units, or about 10%, Nikkei Asian Review reported https://s.nikkei.com/2nlgcSk, hinting that demand for the recently launched versions of its flagship phone was picking up.

"Previously, Apple was quite conservative about placing orders", which were less than for last year's new iPhone, the Nikkei said on Friday, quoting a source. "After the increase, prepared production volume for the iPhone 11 series will be higher compared to last year".

The company's shares rose 1.8% to $224.78 in early trading. The recent surge in iPhone orders is concentrated in the cheapest iPhone 11 model and the iPhone 11 Pro model, sources cited by Nikkei said, while Apple has slightly reduced orders for its top range model, the iPhone 11 Pro Max, which has a starting price of $1,099.

"Despite all the perceived black clouds from being the poster child of the current U.S.-China trade tensions, Apple is seeing a very strong iPhone 11 demand trajectory and defying many skeptics that have been yelling fire in a crowded theater over the past few months," Wedbush analysts wrote in a note. The latest iPhone 11 range hit stores in China in September, with short queues of die-hard fans contrasting with the hundreds who camped out ahead of some previous launches, Reuters had reported.

However, Apple Chief Executive Officer Tim Cook told German daily Bild earlier this week that iPhone sales were off to "a very strong start". J.P. Morgan analysts have also raised their iPhone shipment forecast and now expect Apple to sell 1 million units more than their previous estimates.

But concerns remained. Suppliers remained cautious, the Nikkei reported, adding they were concerned that the higher level of orders would not be sustained.

"Demand is good for now. But we have to be careful not to be too optimistic," an executive-level source said in the report. "I hope that this year's peak season lasts longer than last year." Apple did not respond to a Reuters request for comment.

Cupertino-based Apple had recently started focusing more on its Services unit, which includes sales from iCloud, the App Store and other businesses, as smartphone sales showed signs of slowing down. In the company's latest reported fiscal quarter, iPhones contributed less than half of company revenues for the first time in seven years.

Apple launched its three new iPhone models in September and reduced the starting price of the model upgrade, despite better cameras, to $699, compared to $749 for last year's iPhone XR.

Also Read: REFILE-Apple raises iPhone 11 production - Nikkei

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