In the face of economic instability, high inflation, and interest rates in 2023, Apple Inc. plans to maintain its iPhone shipments at a similar level to the previous year. The tech giant has requested its suppliers to manufacture approximately 85 million units of the forthcoming iPhone 15 this year, in line with 2022’s target.
Despite projections of a decline in the global smartphone market, Apple aims to hold steady, potentially increasing its overall revenue as it mulls over hiking the price for its Pro models. These strategies come as Apple continues to weather economic challenges far better than many of its rivals in the smartphone arena.
Apple’s Global Impact
As the world’s most valuable company, Apple’s strategies and fortunes create ripple effects across the global economy, impacting thousands of suppliers and providing employment for millions, from the US to China, and from Vietnam to India. The company’s shares have soared nearly 50% this year, pushing its market capitalization to a staggering $3 trillion.
Apple’s production plans draw intense scrutiny due to the widespread impact of its operations. Corporations including Samsung Electronics Co., Taiwan Semiconductor Manufacturing Co., and Foxconn Technology Group rely heavily on iPhone business for their own growth and margins.
In a bid to shift investor focus towards more predictable aspects of its business, such as the App Store, Apple stopped disclosing specific shipment numbers in 2018.
Compensating for Production Challenges
Apple has encountered a few production hiccups this year, including a forecast trim for its entry-level phones by about 2 million due to a challenge with CMOS image sensors. However, it has compensated for this decrease by increasing orders for its higher-priced Pro models.
Furthermore, a minor hiccup with the new iPhone screens is expected to be fixed within a week or two, ensuring it does not impact overall production.
Despite the turbulence of the global economy, Apple’s shipment target of 85 million units for this year is only slightly lower than the initial 90 million target it set in the previous two years, which the company failed to meet due to a chip shortage in 2021 and prolonged Covid controls disrupting production in China in 2022.
A Beacon in the Smartphone Market
In contrast to Apple’s resilience, several competing smartphone companies that build Android-operated devices are struggling. Phone sales have declined for eight consecutive quarters, with an 8% drop in the June quarter, according to Counterpoint Research. Chinese Android brands Vivo and Xiaomi have both experienced declines of more than 10%.
However, Apple’s sales have dipped only 2% in the most recent quarter. The company has even seen a rise in market share to 17% due to the continued demand for phones priced at $600 or more. The “premiumization” wave has allowed Apple to reach record shares in markets typically not considered its core, such as India, where it saw a 50% Year-over-Year growth in Q2 2023.
Despite an unfavorable economic environment, Apple’s strategies for 2023 reflect its robust position in the global market and its unwavering commitment to providing high-quality products to consumers worldwide. The company’s ability to remain steady in the face of economic turbulence further solidifies its place as a leader in the tech industry.