Ordering a new Apple iPhone? Expect a short delay before it arrives
Apple has been expected to introduce the sequel to its entry-level iPhone SE next month. The iPhone SE2 is actually expected to be called the iPhone 9 because it looks just like the iPhone 8 right down to its 4.7-inch LCD display. Inside though, the iPhone 8's A11 Bionic chip is swapped out for the A13 Bionic chipset. The latter is the powerful SoC used by the 2019 iPhones. And besides the upgraded chip, Apple has increased the amount of memory by on the phone 50% from 2GB of RAM to 3GB. Pricing is expected to start at $399.
Apple's goal was to offer some new device in the first half of the year to drive sales six months after the release of the iPhone 11 Pro line. Production of the new model was supposed to start at the end of this month. But along came the coronavirus forcing companies like Foxconn to shut down their assembly lines. The contract manufacturers and suppliers are slowly restarting production; despite this news, there is speculation that production of the iPhone 9 might not start until next month.
iPhone production facilities are running at 30% to 50% of capacity
According to the Nikkei Asian Review, Apple originally asked its suppliers to build 80 million iPhones for the first half of 2020; this figure includes 15 million iPhone 9 units. But one anonymous source told Nikkei that iPhone suppliers are currently running at 30% to 50% of capacity. "The constrained supply of iPhones will likely extend to April. There are still a lot of hurdles, from labor shortages to logistics transportation," the source said. Apple also pointed out that iPhone supplies are constrained when it made an announcement late yesterday about the effect of the virus on the company's current quarter. 75% of Apple's top 200 suppliers have at least one production facility in China while 22% own three facilities or more. There is potentially some good news for Apple. Today, JP Morgan Asia Pacific Equity Research told clients that "...inventory restocking driven by the demand side could be strong once the virus impact lessens."
Apple iPhone buyers in the U.S. have been impacted. Best Buy's iPhone inventory has been so low that it took a week for your's truly to pick up a new 256GB iPhone 11 Pro Max ordered at a nearby store. Deliveries of the Midnight Green 256GB versions of the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max are said to be running eight days from Apple while those in Taiwan have to wait as long as 11 days for the same models.
Render of the Apple iPhone 9
Another source stated that "The suppliers are doing their best to produce and ship the [cheaper] iPhone within four weeks...The delay can't be too long, otherwise it will affect the sales strategy of Apple's new products in the second half of this year. The biggest uncertainty is still lingering as no one can be sure whether the coronavirus is under control." A 14-day quarantine period for those who traveled to other provinces expires on Monday which should allow the contract manufacturers to hike production some more.
The report says that companies like Foxconn have been working hard to make sure that their facilities are free of the virus and that shortages of parts, components, and labor are taken care of. Some of the new restrictions are turning the shipping of parts into a major issue. Some suppliers have to change drivers who are delivering parts and components from the supply chain every time a provincial border is crossed. The Chinese government, concerned about the effect of the virus on the economy, has asked local governments to help the contract manufacturers resume production of products.
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