The grow in orders appears to validate Apple CEO Tim Cook's new strategy of appealing budget-conscious consumers with cheaper models amid the weakening world economy. The order boost of between 7 million and 8 million units is corresponding to total annual phone shipments this year by Google, a rising iPhone rival in Apple's home U.S. market.

 

''This autumn is so far much busier than we expected,'' one source with direct knowledge of the situation said. ''Previously, Apple was quite conservative about placing orders,'' which were less than for last year's new iPhone. ''After the increase, prepared production volume for the iPhone 11 series will be higher compared to last year,'' the source said.

 

Shares of Apple component manufacturers flashy in Japan right after publication of the Nikkei report, outperforming the much wider market. Japan’s Minebea Mitsumi closed up 3%, troubled iPhone screen maker Japan Display rose by around 2%, while Murata Manufacturing and Alps Alpine also gained.

 

Apple announced its three new iPhone models - the iPhone 11, 11 Pro, and 11 Pro Max - in early September, and for the first time in its history reduced the starting price of the model upgrade, despite better cameras, to $699, compared to $749 for last year's iPhone XR. Apple's new budget-conscious strategy came as the global smartphone market is assumed to shrink in general for the third year running, according to research company IDC. In January, Cook acknowledged that ''price is a factor'' behind Apple's slowing sales, especially in emerging markets. 

 

The latest surge in iPhone orders is centered in the cheapest iPhone 11 model and the iPhone 11 Pro model, sources said, while Apple has a little bit revised down orders for its top of the range model, the iPhone 11 Pro Max, which has a starting price of $1,099. Cook recently told German newspaper Bild that he could not be happier with the iPhone 11 launching and that its sales had enjoyed a ''very strong start.'' Apple's share price has advanced approximately 40% this year and is now close to its October 2018 record high.

 

Nevertheless, suppliers remain cautious and said they were anxious that the higher level of orders wouldn't be endured. ''Demand is good for now. But we have to be careful not to be too optimistic,'' one executive-level source told the Nikkei. ''I hope that this year's peak season lasts longer than last year.''

 

One element that may have helped stimulate demand momentarily is that Apple's iPhone 11 is still manufactured in China, and Washington has briefly postponed a planned 10% tariff on China-made electronic imports. The wait in the tariff hike, from September to December 15, will help demand during the Thanksgiving and Christmas shopping seasons. Donald Trump has hardened his posture on trade talks with China, saying in September he did not want an interim truce.

 

Nevertheless, the uptick in iPhone orders is a welcome change in recent fortunes for California-based Apple.

 

Just the previous year, Apple asked key iPhone assemblers Foxconn, which previously trades as Hon Hai Precision Industry, and Pegatron to call off additional production only weeks after the iPhone XR hit the shelves. Subsequently, this January, Apple made an infrequent move when it cut its quarterly sales forecast, blaming soft iPhone demand in China as its economy slowed. A continuous rise in demand now would therefore counter the 2018 drop in iPhones sales - the company's first since the iconic handset first launched in 2007.

 

''Apple's pricing strategy this year so far turns out to have boosted some initial sales and preorders. ... However, given the weakening world economy and uncertainties ahead, we are concerned whether the good demand will last long,'' said Chiu Shih-Fang, a veteran smartphone analyst at Taiwan Institute of Economic Research.

 

''Even if the second half is definitely better than the first half, we need to monitor if the lower average sale price could have an impact on Apple's total revenue.''

 

Yasuo Nakane, head of global tech research at Mizuho Securities, said he had revised up 2019 iPhone manufacturing estimates to 194 million units from 178 million - although that is still lower than the 208.8 million iPhones sold in 2018. All models in the iPhone 11 range have better cameras than last year's, and are loaded with facial recognition and wireless charging features similar to 2018.

 

Compared with rivals Samsung Electronics, Huawei Technologies, Xiaomi and Oppo, Apple did not introduce 5G compatibility, the next generation wireless communication standard that allows faster data transfer and low latency. In the first half of 2019, Apple suffered a nearly 25% slump in iPhone shipments, in comparison to 2018, according to IDC - far worse than its main rivals, Samsung Electronics and Huawei Technologies. The world's top two smartphone makers, respectively saw an almost 2% drop and a nearly 26% surge in shipments over the same period.

 

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