Dan Howley joins Myles Udland and Brian Sozzi to discuss Apple’s reported plans to increase production of its next-generation iPhone to as many as 90 million phones and how Apple is bypassing the chip shortage affecting other products around the globe.
Video Transcript
MYLES UDLAND: Yesterday, Bloomberg reported that Apple is looking for a massive cycle for its next generation iPhone, set to be unveiled, as most iPhones are, in the coming fall. Yahoo Finance’s Dan Howley stops by for the details on this report and the readthrough, Howley, on– are we going to call it a supercycle? Where are we at with the use of the word “supercycle” in iPhone upgrades? And what are we looking at this year?
DAN HOWLEY: Yeah, this is going to be better than the last year. Then I guess it’s a super duper cycle or something along those lines. Last year, Apple had an order of 75 million iPhones. According to this report, they’re going to be seeking an order of 90 million iPhones. And really, what this appears to be is just kind of the reopening process and more people getting out there.
Plus, it’ll be the second generation 5G iPhone. So maybe a lot of purchasers were looking at the first generation and thinking, I don’t really need 5G. What’s the deal with that? Maybe I’ll wait for the second generation to make sure all the bugs are worked out. And I think that’s what we’re seeing here. But it’s also worth noting that the last cycle sold incredibly well, the iPhone 12. So it’s not as though that was a bummer or anything for Apple. But this seems to be an opportunity for them to even go past that. And that looks like what they’re predicting.
But as far as the devices themselves, it’s going to be slight upgrades. I say that kind of lightly because they’re going to have faster processors. They’re going to have better screens, at least as far as the Pro model goes, the Pro Max model likely. Better processors, things along those lines. So it’s kind of the top to the tick cycle, where the tick is we get the body design, the changes on the chassis, things like that. And the tock kind of being when we get the internal upgrades that really push the performance of the iPhone.
So it’ll be the four models. The smaller– smallest version– that’ll probably be just the 13. Then we’ll have the larger version of the 13. And then we’ll have the two Pro versions, the Pro and the Pro Max. I’m kind of partial to the Pro Max just because it’s the most expensive, and I like pricey things. But I think that that’s really where the best technology is going to come. There’s going to be, according to this report, improvements to the video quality capabilities of these cameras. So I think that’s going to be very– pretty important.
And it’s not just the iPhones that they’re going to be working out. They’re also going to have some new MacBooks coming later this year, as well as there’s been reports for a while as a redesigned iPad Mini, which is really, in my opinion, the best iPad out there. It’s the smallest one. It doesn’t take up a whole lot of space. And it’s a lot easier to hold than the other iPads.
So I’m really excited to see if they’re able to make that screen on that a little bit larger and kind of reduce those big bezels that they have on them, on the current models. But yeah, huge upgrades to the amount that Apple is seeking, 90 million versus 75 million for the next generation. And that’s just the first run, so we’ll see if they increase that later down the line.
BRIAN SOZZI: And how are they going to make all these phones right in the middle of a global chip supply shortage?
DAN HOWLEY: Yeah, so Apple– the chip supply shortage really hurts companies that are buying less expensive chips. So Apple is really one of the largest chip companies with contracts. And so what they do is they contract with the firms. And the firms that look at Apple say, well, you’re looking for a more expensive chip, and you’re looking for huge, huge orders of it. So we’re going to provide it to you.
The issues with the automakers is that they’re using older chips that really don’t have much margin for the chip makers. So they’re going to look at Apple. They’re going to look at, like, a Ford, Toyota, or something along those lines, and say, “Well, you guys are using older chips. It’s not really going to benefit us that much. We only have a certain amount of capacity to put out these chips. We’re going to go with Apple. And then we’ll provide something for you later on.”
So it doesn’t seem like it’s going to hurt Apple for the time being. And I think by the time we get these next generation iPhones, we should start to see the chip shortage a little– calm down a little bit. Maybe have more chips be available. They’re saying that it’ll last between 2021 and 2022. We’ll see then, but this is for, obviously, the 2021 version. So it could start to be the end of the chip shortage by the time these phones come out.
MYLES UDLAND: Yeah, Howley, I heard a conversation with an industry expert who was saying when Apple comes to buy the chips, they say, “Cool, we’ll buy all the chips.” And it’s like, “For how long?” “No, no, all the chips.” And so they don’t have the problem, right? It’s everybody else on the edges of the chip global supply. Apple is the supply. They are the market. And so Apple gets to make as many phones as they want. All right, Yahoo Finance’s Dan Howley with the latest on the forthcoming next Apple i–
