Apple Inc. (AAPL) – Get Report shares edged higher Tuesday following a report that the tech giant is planning a significant increase in its iPhone manufacturing to meet an anticipated surge in 2021 demand.
Japan’s Nikkei business newspaper said Apple has instructed suppliers to produce around 230 million iPhone handsets next year, a 30% increase from the pre-pandemic pace of 2019, with around 96 million slated for the first half of the year.
Foxconn Technology Group (FXCNY) , the world’s biggest electronics manufacturer and Apple’s most important supplier, said last month that 2021 sales will grow by around 10% amid what it sees as strong demand for consumer electronics in general and the iPhone 12 more specifically. Apple typically accounts for around half of Taiwan-based Foxconn’s annual revenue.
Apple shares were marked 2% higher in pre-market trading Tuesday to indicate an opening bell price of $124.16 each, a move that would extend the stock’s six-month gain to around 45%.
Last week, Wedbush analyst Dan Ives, a long time Apple supporter, lifted his price target on the group by $10 per share, to $160 per share — the highest on Wall Street — with a new ‘bull case’ level of $200 and an outperform rating, citing “a clear uptick” in iPhone demand in both the U.S. and China.
Ives said sales of the iPhone 12, launched in October, could approach the 80 million to 85 million unit level by next year, well ahead of his prior forecast of between 65 million and 70 million, based on supply chain observations and improving demand.
He also noted that between 350 million and 950 million older iPhones are within the window of an upgrade, which he said could translate into an “unprecedented upgrade cycle” for the world’s biggest tech company.