Apple's (NASDAQ:AAPL) iPhone 11 has been selling well in China, helping drive the company's comeback in the Middle Kingdom. Various efforts like absorbing currency fluctuations and reducing trade-in friction have also contributed to revenue stabilizing in the world's largest smartphone market. For instance, iPhone unit sales jumped an estimated 18% to 3.2 million in December, according to government data.
The iPhone 11 and 11 Pro are selling so well that Apple has now reportedly boosted its chip orders from Taiwan Semiconductor Manufacturing (NYSE:TSM).
Needing more chips
Bloomberg reports that the Cupertino tech giant has increased its orders of A-series chips from TSMC due to strong iPhone demand, particularly in China. Greater China revenue had fallen 2.4% to $11.1 billion in Q3, but CEO Tim Cook clarified that sales actually grew on a constant currency basis, which removes the impact of currency fluctuations during the quarter.
TSMC is Apple's contract chip manufacturer for its Apple-designed processors like the A13 Bionic, and smartphone chips represented nearly half of TSMC's revenue in 2019. Apple is one of the company's largest customers.
The A13 Bionic chip is one of the first processors to be produced on TSMC's second-generation 7-nanometer process technology. The Taiwanese company often enjoys a seasonal jump in sales near the end of the year as Apple launches its latest and greatest smartphones, and 2019 was no different.
The iPhone 11, which is more affordable and has fewer bells and whistles than the iPhone 11 Pro, is selling especially well, according to the report. Compared to its predecessor (iPhone XR), Apple reduced the starting price of the iPhone 11 by $50 this year, and that lower price point is helping boost demand.
Separately, Consumer Intelligence Research Partners (CIRP) also released data this week that estimates iPhone 11 and 11 Pro represented 69% of U.S. iPhone sales in the fourth quarter, corroborating the idea that the latest iPhones are resonating with consumers.
But wait, there's more!
Apple is expected to release a new mid-range iPhone within a couple of months. Bloomberg separately reported that production of that "iPhone SE 2" is set to commence next month ahead of a March launch. The tech company is believed to be using the same strategy that it did with the first-generation SE: recycle an old chassis but incorporate the latest components while charging a mid-range price.
In this case, the iPhone SE 2 should use the iPhone 8 chassis but include the same A13 Bionic that powers the iPhone 11 and 11 Pro. That all means even more A-series chip orders for TSMC.