With iPhone 6 Approved in China, Apple Suppliers Ready for Demand

With the launch of Apple's eagerly anticipated iPhone 6 finally on the horizon for Chinese fans, the U.S. company's supply chain is geared up and ready to deal with any surge in demand from the world's largest smartphone market.

The iPhone 6 and 6 Plus are slated for an Oct 17 release on all three of China's wireless carriers, Apple said on Tuesday. The company fixed the date after addressing software security concerns raised by regulators, which delayed the launch in China beyond the Sept 19 of several other countries.

Apple's suppliers said the delay did not have an impact on production, and are confident they can keep up with demand when the new, larger iPhone models hit China. Analysts expect the phones to prove very popular with many of the country's 1.27 billion mobile subscribers, for whom bigger iPhone screens have long been on their wish lists.

A spokesman for Taiwan-based iPhone assembler Pegatron Corp estimated the company is currently operating at 80 to 90 percent of full capacity across the devices it makes for an array of clients.

"Our capacity around this time of the year always faces a certain amount of pressure, though this year isn't any worse than other years," he said.

Others in the supply chain also said they weren't even producing iPhones at full capacity yet. One supplier is increasing capacity as it has to fill 8 million orders per month, but hasn't seen any delays, a person at the supplier said.

"We aren't seeing any unexpected order demand because of China right now," said another person at a major supplier, who declined to be identified because of how closely Apple guards information on iPhone production.

"Everything is operating on schedule," the person said.

Another person at a major supplier, who also declined to be identified, said that at least for the suppliers, end demand hasn't outstripped supply expectations.

(Also See: In China, a Glut of Black-Market iPhones and a Glum New Reality for Apple)

"Sometimes it is funny that when it comes to the retailers, you hear about consumers having to wait a few weeks for their iPhone," the person said.

"But this may not be because the supply chain has a bottleneck, it may have to do with retailing strategy of individual retailers."

Domestic preference
Research firm Gartner projects Apple will sell 10 million iPhone 6 units per quarter in China, a market the U.S. smartphone maker has often slated as one of its most important.

But one supplier in Japan expressed less optimism about the iPhone 6. The supplier expects Chinese carriers to be less keen than their Japanese counterparts to sell the phone because they could show greater preference for domestically produced models.

"I doubt that China sales of the iPhone 6 will have as big an impact there as with the iPhone 5S and 5C," said the person, who was not authorised to speak with media.

The cheapest model, the iPhone 6 with 16GB of storage, carries a suggested retail price in China of CNY 5,288 ($860.16) while the most expensive, the iPhone 6 Plus with 128GB of storage, has a CNY 7,799 ($1,266.82) price tag.

Apple sold a record 10 million iPhone 6 handsets in the first weekend after their launch, which excluded China. Last year, the U.S. tech firm sold 9 million iPhone 5S and 5C models in 11 countries, including China, in the same period.

The Cupertino, California-based company said iPhone sales in China grew 50 percent in April-June from a year earlier, effectively salvaging an otherwise lacklustre quarter. The strong sales came despite signs that Chinese consumers were waiting for the iPhone 6, analysts said.

© Thomson Reuters 2014