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There’s little doubt that the novel coronavirus pandemic has been turning the world upside down, and it became obvious as far back as January that it would have some impact on Apple’s Chinese supply chain, since that country was the epicentre of the outbreak. What’s been more uncertain, however, is exactly what that impact is going to be, and which Apple products could be affected.
By mid-February, Apple admitted that it was going to miss revenue targets as a result of the pandemic, but that the company remained “fundamentally strong” and would ultimately weather the storm. However, despite China getting the coronavirus under control, it seems that there’s still a great deal of uncertainty about the future of the 5G-capable iPhone 12 that would normally be expected to launch this fall.
Conflicting Reports Abound
In early February, we heard the first report that the outbreak would limit the supply of Apple’s iPhone 12 due to the inability of Apple engineers to travel to China to participate in the testing and certification of the device. However, sources in the supply chain insisted that the 5G iPhone is “still on schedule to launch in the fall” since production wouldn’t start until at last June anyway, at which point everything in China should be back up to full speed.
However, in what’s rapidly becoming a new game of “he-said-she-said,” we heard yet another contradictory report coming out of China suggesting that Apple could delay the iPhone 12 launch by months — possibly pushing it into early 2021 or beyond.
What’s important to note, however, is that this report isn’t primarily about the ability of the Chinese supply chain to actually produce sufficient units of the new iPhone, but rather fears that there may not be any demand for the device in the midst of the pandemic. The report also suggests that Apple has already pushed back the normal deadlines for suppliers to begin volume shipments by about two months, to the end of August. While this is still before a normal September product launch, suppliers note that Apple typically expects them to have mass production fully ramped up by June in order to ensure that sufficient stock is available for launch day.
No one is talking about manpower or material shortage (in China) anymore. Now everyone is looking at whether demand from U.S. and Europe could keep up.Reuters
A separate report from Reuters also backed up the idea that the real issue is about the ability to actually sell the new iPhone model rather than the ability to supply it, citing a “senior official” in Apple’s supply chain who said that ramping up of production for the iPhone 12 has “been postponed,” while noting however that it doesn’t entirely rule out a fall launch.
Suppliers Remain on Track
Once again, however, major Chinese suppliers are refuting this claim, reassuring Bloomberg that everything still remains completely on track.
The next iPhones with 5G wireless capabilities remain on schedule to launch in the fall, partly because mass production isn’t slated to begin until the summer, people familiar with matter have said.Bloomberg
It’s worth keeping in mind, however, that the information in this case is coming from Hon Hai — the company more colloquially known as Foxconn — in an attempt to reassure investors that everything is okay in the midst of falling profits, so there’s definitely an incentive for the company to put the most positive spin on the situation possible.
What About the ‘iPhone 9’?
There has also been some uncertainty about the production of Apple’s so-called “iPhone 9.” While most reports suggested that it wouldn’t be delayed, it was expected to debut this month, and there are only two days left for that to actually happen. Some analysts are now saying that it could be pushed back into May.
Apple was originally expected to hold a media event on March 31, which would have been tomorrow, but of course that got quickly called off as California began to enter a state of total lockdown. This hasn’t stopped Apple from releasing a new iPad Pro and MacBook Air via press release, however, but frankly we’ve been expecting a lot more.
What It All Means
The reality is that the entire situation remains very much in flux, and it’s quite likely that even Apple isn’t entirely certain about what’s going to happen. Sources have suggested that they may be deferring a decision until mid-May, but either way it makes total sense that Apple would at least be discussing and considering all possibilities, since everything is on the table right now and the company has to be prepared for anything that may come.
Even while painting a worst-case scenario, analysts at Wedbush are saying that a delay into 2021, while a possibility, is extremely unlikely. The most realistic case is simply that the 5G iPhone launch gets pushed “into the holiday quarter” — meaning it would launch in October rather than September. While that may seem like a minor delay for most of us, the fact that it moves it into a different quarter could still be significant for Apple investors.
Still, there’s no doubt that right now the world is changing day by day, if not hour by hour, so it’s difficult to put an accurate timeline on any of Apple’s new products, and it’s safe to say that we’re going to probably keep hearing conflicting rumours as Apple and its Chinese supply chain struggle to figure out their capabilities and strategies. Apple CEO Tim Cook’s logistical skills are the stuff of legends, but the current situation is almost certainly putting even those to the test.