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July 8, 2015 at 3:21 pm #1017pc_adminKeymaster
The Wall Street Journal, July 8, 2015 1:25 p.m. ET
Apple Inc. is preparing for a larger initial production run of its next iPhones, betting that even modest hardware changes will entice consumers to upgrade handsets and outstrip demand for the larger-screen phones that it released last year.
Apple is asking suppliers to manufacture between 85 million and 90 million units combined of two new iPhone models with 4.7-inch and 5.5-inch displays by Dec. 31, according to people familiar with the matter. The screen sizes are the same as in the iPhone 6 and iPhone 6 Plus.
By comparison, Apple last year ordered a then-record initial production run of 70 million to 80 million for its first larger-screen iPhones.
An Apple spokeswoman declined to comment.
Apple was slow to enter the larger smartphone market, but it has recorded blockbuster sales for its latest iPhones. In the first half of its fiscal year ending September, Apple sold 135.6 million iPhones, a 43% increase from the same period a year earlier. Before the iPhone 6, Apple’s largest phone had a 4-inch display.
The changes in the iPhone models expected to be released later this year will be less noticeable than last year’s. The phones are expected to feature Apple’s Force Touch technology that can distinguish between a light tap and deep press, allowing users to control a device differently depending on how hard they push on the screen, according to people familiar with the matter. Apple has added this feature to the Apple Watch and MacBook laptop computer.
In addition to keeping the display size unchanged, Apple is expected to keep the screen resolution about the same, according to people familiar with the matter.
It may offer a fourth color for the aluminum casing of the iPhone, in addition to silver, gold and space gray, these people said.
The information about iPhone production orders comes from Apple’s suppliers. Apple may adjust orders based on its projected demand, and it doesn’t inform all suppliers at the same time.
Hon Hai Precision Industry Co., also known as Foxconn, which has long been Apple’s primary assembler, is recruiting workers at its main iPhone production base in Zhengzhou, north-central China, anticipating mass production of the new phones to begin next month, the people familiar with the matter said.
Apple tends to release new iPhones in a “ticktock” cycle—a phrase also used for the releases of new processors at Intel Corp. In a “tick” year, Apple introduces a major design change, such as last year’s bigger displays. In the following “tock” year, it refines the previous year’s design and sometimes makes more significant changes to the software.
To help produce the new phones, Apple is considering a third assembler, Wistron Corp., the people familiar with the matter said. Last year, Apple relied on Hon Hai and Pegatron Corp., and consumers sometimes faced long waits for the larger display phones.
Wistron has some experience manufacturing iPhones. The Taiwan-based contract maker started producing the older generation iPhone 5C model last year when Pegatron shifted to make the iPhone 6. If Wistron passes Apple’s production run test in the coming months, it would be the first time Apple used three assemblers for the latest iPhone models. Also, it would likely mean a further reduction in Foxconn’s share of Apple’s iPhone orders.
Apple has diversified its assembly partners as its product portfolio has expanded. The strategy limits the exposure from relying too heavily on a single supplier for products that need to reach market quickly and in very high volumes.
Some component suppliers started manufacturing parts for the new iPhones in large quantity earlier this month, the people familiar with the matter said.
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