The coronavirus is a wild card that just might affect when Apple is able to start shipping its new phones. At first, analysts said that any delay would be limited to the release of the entry-level iPhone 9 (aka iPhone SE2) that is expected to be unveiled at the end of this month. Originally, these Wall Street number crunchers said that there wouldn't be any change to the introduction and release of the 2020 iPhone models (all four with support for 5G). But as the virus continues to spread, Apple might be forced to make changes to its fall schedule after all. That is what Bank of America analyst Wamsi Mohan is thinking after having a discussion with Apple supply-chain expert Elliot Lan. Mohan says that the release of the 2020 iPhone handsets (the first 5G units from Apple) could be delayed by up to one month.
A combination of issues with the supply chain and demand is behind analysts' cut in iPhone sales forcasts
Lan says that the launch of the iPhone 9/iPhone SE2 will be delayed "by a few months," and blames "both supply issues as well as the weaker demand environment from COVID-19." Mohan says that what happens this fall with the introduction and launch of the 2020 flagship iPhone models will be determined by how fast production ramps up in April and May. The COVID-19 virus forced Apple's manufacturing partners like Foxconn and Wistron to shut down assembly lines to protect workers and companies along Apple's supply chain did the same thing. But now production has restarted in Chinese factories and assembly lines are once again churning out components and products, although not yet at full-speed. Apple has been slowly reopening the 42 Apple Stores it has in China. All of the retail locations had closed, but at last count 29 of the stores are now open with limited hours.
Also weighing in today is UBS analyst Timothy Arcuri. The latter says that because of the coronavirus, Apple could suffer through a patch of sluggish demand in the near-term. And the analyst says that this lethargic demand will expand beyond China and could continue through June. Another analyst, Jeffrey Kvaal, who plies his trade for Nomura Securities, says that he stands by an earlier comment he made about a faster than expected recovery for Apple's supply chain. Kvaal points out that any bottlenecks in the tech titan's supply chain will be short-term as the "risk of a major supply shock is declining." The analyst added that "we hope and expect that potential demand declines are less severe."
AppleInsider was able to get a look at a note sent by UBS' Arcuri to his clients. In that note, the analyst says that for the three months from January through March, Apple will build and sell 36 million iPhone units, down 23.4% from the 47 million he previously expected. While this might be a drop from Arcuri's expectations, at 36 million handsets Apple will have produced and sold 4% more phones than it did during the same period last year.
For Apple's fiscal third-quarter covering the three months from March through June, the analyst has reduced his estimate. He originally called for Apple to sell 40 million handsets during the period and has since cut that forecast by 5% to 38 million. Arcuri expects Apple's contract manufacturers to start producing the iPhone again at the end of this month with full production resuming sometime between April and June.
Late next month, Apple will report its fiscal second-quarter earnings covering the three months from January through March. Wall Street expects the company to report earnings of $2.71 a share for the period, an estimate that has declined 9.6% during the last month. Expectations for quarterly revenue has dropped 5.5% over the same period and is now at $61.5 billion. That is under the low-end of the $63 billion-$67 billion range Apple forecast during its fiscal first-quarter conference call.