What's going on?
According to reports on Friday, Apple recently told its suppliers to increase their iPhone 11 production – suggesting that the company’s anticipating higher customer demand than previously for its $700-plus handset.
What does this mean?
Whenever Apple (or anyone else, for that matter) launches a new product, it forecasts how much demand it expects there’ll be and then places the relevant orders with its suppliers. But Apple always leaves some leeway to increase or decrease the size of those orders once it develops an even better idea of how many units it’ll shift. The company now appears to think it may sell more of its flagship new smartphone than initially forecast – and has told its suppliers as much, reportedly asking them to produce 10% more iPhones than it’d originally requested.
Why should I care?
For markets: Apple’s tree sprouts.
Shares of Apple’s Asian suppliers rose on Friday: they’ll earn more from producing more iPhones as production processes are already in place. And Apple’s stock rose too. Its share price historically ebbs and flows in response to such reports (or their absence): investors may reckon they indicate strong iPhone sales to come. Those remain crucial for Apple: iPhones still contribute most of the company’s sales, even though it’s now focusing on growing its more profitable services division. The slightly lower price tag on some iPhone 11 models may be keeping customers loyal who’d otherwise have defected to arch-nemeses Samsung and Google (tweet this).
For you personally: James and the Giant… Apple.
Beyond being a favorite among Finimizers, Apple’s sheer size means it represents 4% of the entire US stock market. Investors who bought the company’s shares based on Friday’s news therefore influenced the direction of the stock market as a whole, taking “passive” investors – who might not have elected to buy Apple’s shares directly, but could still own a slice via exchange-traded funds which group together several stocks – along for the ride.