Apple to make 20 percent fewer new model iPhones this year
Apple Inc (AAPL.O) expects to ship 80 million new model iPhones this year, down 20 percent from what it had planned at the same time last year, Japanese financial daily Nikkei reported on Friday, citing industry sources.
The California-based firm has asked suppliers to make about 20 percent fewer components for the three new iPhones it plans to launch in the second half of 2018, compared to last year’s plans for its iPhone X and iPhone 8 models, the paper reported.
The report added to concerns that consumer passion for new editions of the iconic smartphones may be cooling after years of scorching growth, sending shares in Apple and many of its major suppliers lower and weighing on global stock markets.
“This news needs to be viewed in the context of Apple probably being overly optimistic last year in relation to the prospects for its new phones, leaving it with excess inventory in the first part of this year,” Atlantic Equities analyst James Cordwell said. “At least part of this lower order forecast probably relates to Apple just being a little more realistic.”
Apple did not immediately respond to a request for comment.
The company sold 217 million iPhones, including its older models, in the fiscal year ended Sept. 30. It does not break down the figures by model and is still manufacturing large numbers of earlier versions of the phone.
Factset and Thomson Reuters do not provide estimates for new model iPhone sales.
Some analysts said they already expected Apple to sell fewer phones this year than last as global demand for phones tightens and competitors eat into its sales. The company sold 129.5 million iPhones in the past two quarters, little changed from the same period a year earlier.
Apple’s shares fell as much as 2 percent on the report, while those in suppliers AMS (AMS.S) and Dialog Semi (DLGS.DE) sank 6 percent and 4.1 percent, respectively. Dialog’s shares had slumped 17 percent last Friday after it said Apple would cut orders for its power-management chips by around 30 percent this year.
Many analysts have said the high price of the iPhone X – which sells for $1,000 and is the first iPhone to sport a new design since the launch of the iPhone 6 in 2015 – is also muting demand for the flagship.
“Apple is quite conservative in terms of placing new orders for upcoming iPhones this year,” said one of four industry sources cited by the Nikkei Asian Review.
“For the three new models specifically, the total planned capacity could be up to 20 percent fewer than last year’s orders.”
Top Apple analyst Ming-Chi Kuo said earlier this week that Apple might cut prices of new iPhones to debut later this year by as much as $300, according to several media reports.
Kuo said that Apple was likely to launch a 6.5-inch OLED “IPhone X Plus,” a second generation of iPhone X and an iPhone with a 6.1 inch screen.
“As the improvements made to the iPhone each year become increasingly marginal it may become more difficult to convince consumers to pay up for the latest model, when an older generation device is effectively just as good,” said Atlantic Equities’ Cordwell.
While media speculation about demand for the iPhone X swirled in the past six months, Apple’s market value has continued to rise and is now within striking distance of $1 trillion.
D.A. Davidson & Co analyst Thomas Forte also played down any fears.
“I am not overly concerned … about the lower supply speculations,” he said. “Apple is doing enough in general to keep the ball moving forward.”
The iPhone is by far the biggest revenue generating product from Apple. However, in an attempt to offset the impact of a weakening smartphone market, the company has been focusing on services as a path to growth.
The unit, which includes Apple Music, the App Store and iCloud, posted $9.1 billion in revenue in the second quarter. For the fiscal year 2017, iPhones contributed 62 percent to the company’s total revenue, while services accounted for 13 pct.
When Factories Have A Choice Between Robots And People, It’s Best To Start With People
It’s lazy to think that a manufacturing process is better just because it’s automated. While the effort going on right now at the Tesla factory in Fremont is anything but lazy, it brings into the spotlight one of the core problems with the simplistic “automation for automation’s sake” strategy: processes that aren’t stable to begin with cannot be made stable with robots.
It might seem a bit counter-intuitive: humans are notoriously unreliable at performing a bunch of repetitive manufacturing tasks. Human visual inspectors regularly miss 20% of defects, but this number can go up significantly when humans are poorly trained, tired, or frankly, just don’t feel like doing their job well on any given day. Wouldn’t a machine that is following a program be an upgrade, every time?
Usually not. Even today’s most advanced assembly line robots can be flexible in some ways, but are not yet infinitely flexible like humans are. Interestingly, consistency and quality are almost never the reason manufacturers look to robots; it’s usually about reducing costs. There are certainly exceptions, such as with semiconductor or chip fabrication, where it’s not possible to make the parts “by hand” and automation from day one is the only option (one that causes the length of development schedules to explode). Ultimately, desire to reduce human headcount is the main driver of automation, and depending on the industry, factories expect to make their money back over 18–48 months through a combination of savings on wages and increased throughput since fully automated lines can often produce parts faster.
Does that mean that Tesla’s quest to automate an entire factory as a key competitive advantage is a fool’s errand? Not at all, it’s brilliant. It’s easy to see the logic that it might be easier to design a product to be fully automated from day one. It’s true: you need to design the product with automated assembly in mind in order to ever get there. But the mistake is in thinking that once you’ve built one unit – whether it’s a car or a cell phone – that building millions just means dumping a lot of robots on the line. In actuality, product design is a messy process. I was a product design engineer at Apple for nearly six years, and since then have seen the inside of many processes as CEO of a manufacturing data company. In the consumer electronics industry, it takes multiple iterations of the entire product before it’s even possible to consistently build it with human hands. All during that phase, geometric and other changes are being made, sometimes many times each day. Human operators are really flexible and can quickly adjust to these changes – usually a quick conversation about what changed and how their task needs to change is enough. Robots are rigid – that “quick conversation” is now a multi-hour reprogramming session, often with an expensive consultant. Nothing kills productivity on a development line like automated equipment. I’ve seen this first hand. I’ve also seen that equipment be the first thing ripped out in the next generation of the product. Even though Model 3 is in “production”, it’s clear from Elon Musk that the iteration phase is still very much underway. As Elon said, “humans are underrated”.
While one team of engineers is working on making sure the design is good, there’s often another team working to make sure that the part quality and process is stable. Humans can adjust to variation, but robots usually cannot. If the incoming parts are bent a little differently because they come from a different supplier or if the holes are a little off (think about the last time you put together Ikea furniture), a human operator can accommodate their process enough to make it work. To be ready for automation, all of that variation needs to be tuned out, requiring a systematic approach that today remains very human-centric (though there is hope that machines will be able to do this in the future). While advanced technology can be used to spot variations, highlight them, and even support the failure analysis process, engineers today are still needed to take computer-supported insights, find a root cause, and then eventually determine the corrective action. On a human assembly line, these process engineers can work on many variation problems in parallel because the line is still running and producing samples at each point in the process for them to study and experiment on. On a robotic line, the first major variation brings down the first machine, and no parts get through at all, requiring that each problem be solved in series. It’s much slower, way more expensive, and incredibly frustrating.
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Responsible automation is a multi-step process. The upfront investment in designing a product that can be assembled in an automated way is a nontrivial part of success, and one that has to happen long before robots get their little end effectors on parts. Next comes the rapid iteration phase of new product development, where prototypes of the product are assembled on an assembly line by humans. The flexibility of that line enables many changes to be made in a short period of time, accelerating the development process.
While development processes look different in different industries, it’s usually a period of six to eighteen months where a few iterations of the products are built. During the later stages of development, some steps of the assembly process may become stable, and the initial human assembly line may be hybridized with simple or commonly used robots. For example, in automobile manufacturing, the body shop phase of assembly has been done with robots for a long time, so it makes sense to bring those up early on and pocket the efficiency gain, even if humans continue to do other parts of the process. Regardless of industry, the first line that is qualified to make units for customers will likely still have human assembly operators. Line qualification is a big milestone, and most companies will launch the product and start shipping at that point. They may choose to build more hybrid lines to ramp up capacity first in order to hit numbers, and then once some of the pressure is off, work on automating new lines as a cost-reduction and efficiency improvement process. That first line or lines provides a “golden reference” as new fully-automated lines are constructed in parallel. The advantage of this process is that figuring out automation isn’t gating products from streaming off of lines to hit production numbers, and those products can serve as a “golden reference” for product quality that must be met in order for any new line or automated process to be qualified to ship to customers.
For an industry like automotive where the changes from the 2017 to 2018 model are usually not significant and the same model can run for decades, the capital and development costs of automation are a no-brainer investment. Each model year often only has minor cosmetic design changes, giving engineers the opportunity to work on automating key parts of the process from generation to generation. Tesla Model 3 is just not there yet. Many companies in automotive or other manufacturing verticals who are considering automation for its cost reduction benefits aren’t there yet either. They view automation as “step one” in a cost-reduction plan, and finding and fixing problems is much lower on the list. In actuality, finding and fixing problems needs to be “step one” in order to create a process that is stable enough that automation can be a strong “step two”. As we’ve seen with the Tesla example, trying to skip ahead can end up costing way more money and time.
Conductive inks: conformal 3D-shaped coatings, game-changing success?
A major frontier in the conductive ink business is conformal coating on 3D-shaped objects. For the purposes of this article, we will divide this into two categories as shown below: aerosol-deposited 3D-shaped antennas and conformal on-chip EMI shielding.
Our report Conductive Ink Markets 2018-2028: Forecasts, Technologies, Players shows how one is already a growing success whilst the other is amongst the hottest trends in the conductive ink business.
Aerosol deposition: Gateways to success are open
First lets briefly consider aerosol deposited antennas. Aerosol deposition is digitally controlled and benefits from fewer process steps and a lower machine footprint compared to the main competition LSD (laser direct structure) which also includes a plating step. The aerosol-compatible conductive inks- composed mainly of nano sized or sub micron particles- need to have tight control on particle size distribution so that the jetted lines remain uniform. An ongoing area of development is improving the adhesion and achieving higher conductivity levels at lower temperatures and shorter curing times. After all, performance wise, the competition is plated metallization tracks. The good news is that this application has been making steady progress. Today, multiple industrial scale aerosol machines have been installed worldwide, opening the gateways to ink sales. Source: IDTechEx Research report Conductive Ink Markets 2018-2028: Forecasts, Technologies, Players
Sprayed on-chip conformal EMI shielding: the hottest market trend?
The second category is conformal on-chip EMI shielding. This is amongst the hottest trends in the conductive ink space. EMI (electromagnetic interference) is a growing issue in electronic devices where multiple ICs are packaged in a small space. Of course, EMI shielding could be achieved using bulky and inexpensive metallic cages.
This approach however would add to total thickness, which would be unacceptable in consumer electronic devices where the industry exerts concentrated effort to continually thin devices. This is where conformal coating comes in: a thin conductive ink is applied conformally onto the chip package (onto the epoxy moulding compounds). It may be more expensive, but it is thin. It is already used in, for example, iPhone 7 where several ICs have such coatings. These coatings are however based on sputtered silver. Sputtering is a known and available technology that gives highly conductive, and thus thin for a given EMI shielding performance level, lines.
Ink spraying however is being positioned as a viable and highly attractive to sputtering. This is because unlike sputtering, spraying is a non-vacuum process that can be easily scaled to large areas.
Furthermore, it is a low-Cap deposition technique that gives highly conformal coverage with excellent side-wall coverage. Here also the inks can be appropriately formulated to improve adhesion. These are all attributes that sputtered versions lack. The coated lines however may not be as conductive as well sputtered solid-like thin film coating. This gives interesting dynamics in terms of the preferred choice of ink technology. Nano inks would offer high conductivity and thus higher thinness but come at a cost. Micron-sized spherical-type particles are cheap but not as conductive. Planar flake type particles can give high in-plane conductivity but achieving good side coverage requires optimization. Hybrid versions might hit the sweet spot but that must be proven in evaluations. This dynamic is playing out today.
The spraying technology is already qualified for use on a memory chip. The main ink suppliers present in the final qualification round were both Korean and reliability turned out to be determining factor. The question now is will this technology be adopted by other brands and will it move beyond memory? Despite the sunk cost of CapEx in sputtering machines being a short-term barrier against the adoption of alternative approaches, the engagement is now very strong particularly in China and the market is now eagerly awaiting a proper reference.
This is a space to watch with a large addressable market in which spraying inks offers a compelling value proposition. Indeed, success in this market could change the fortunes of various conductive ink technologies.
Read more at: https://www.printedelectronicsworld.com/articles/14448/conductive-inks-conformal-3d-shaped-coatings-game-changing-success
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