During the outbreak of the new coronavirus, many enterprises were unable to operate properly. In order to survive, some enterprises have to lay off workers, resulting in some people losing their jobs and shrinking incomes. Apple is expected to release a new iPhone this spring and fall, the Wall Street Journal reported today. After being hit first by supply chain disruptions, Apple now has to deal with global demand for new iPhones. Here’s the full text of the article:
Adam Michaels scrutinised his family spending after losing his job as a sports radio producer last week. The new corona virus pandemic has done a lot of damage to the economy, forcing Michaels to cut spending this year. One of the spending cuts he plans to cut this year is to forgo buying a new iPhone.
For the 42-year-old Chicago resident, no longer buying a new iPhone has gone against his tradition. By convention, Michaels buys four new iPhones for his family every two years. “Now spending is not allowed. He said.
Demand is unknown
Consumer demand is becoming a growing problem for Apple. Apple is preparing to release a new, low-cost iPhone model, followed by ordering components for its latest flagship iPhone, which is usually released in the fall. The iPhone accounts for a significant portion of Apple’s revenue, and the model released this fall is expected to attract strong consumer interest because it will support 5G wireless networks. An Apple spokesman declined to comment.
Consumer demand quickly became one of the biggest unknowns for companies, whether soft drink makers or airlines, during the outbreak of new crown pneumonia. The closure of cities in Europe and the United States has led to an unprecedented sharp economic contraction that has left many businesses at a loss.
Apple, which has overcome past economic challenges, is now being buffeted by the outbreak. The health crisis began in China, causing factories to close and disrupting iPhone supplies. The outbreak then spread to Europe and the United States, forcing Apple to close its retail stores and suspend ingress almost all activities in The Silicon Valley campus.
Since iPhone sales peaked in 2015, Apple has focused on persuading customers to change older models. However, this is a much more difficult task during the economic crisis. The low-cost iPhone may seem more timely at a time when it is focused on lowering spending, but its lower price and target audience – emerging markets and existing customers – also mean that it has a limited contribution to Apple’s profits. The new low-cost iPhone models have been compared to the $399 iPhone SE, which went on sale in 2016. Analysts said it was expected to go on sale this month, but could be delayed.
Apple’s new flagship model is usually released in September. That said, the 5G version of the iPhone is months away. However, according to former Apple employees, Apple’s operations team typically orders iPhone camera modules and other components in March and April to assemble the finished product in the summer.
Former Apple employees said the order could indicate the number of new iPhones Apple plans to produce. But in the shadow of the outbreak, consumer demand has never been so uncertain. To make matters worse, the iPhone is selling more and more. Apple raised the price of its flagship machine to $1,000 three years ago, a 50 percent increase that boosted revenue amid a drop in iPhone shipments.
Uncertain market outlook has also unnerved Apple suppliers. Suppliers say they are now concerned that iPhone shipments will fall this year, rather than grow, as many analysts had expected. At the end of April, Apple will release its new quarterly results. In 2018, Apple misjudged demand and cut production orders, hitting suppliers hard, leaving some suppliers in overstocked and failing to make the most of their capacity.
The outbreak has already hit the smart machine industry. Global smartphone sales fell 38 per cent in February from a year earlier, the biggest monthly drop in the industry’s history, according to Market Research Firm Analytics.
Europe and the United States into the worst-hit areas of the epidemic
About two-thirds of Apple’s revenue comes from Europe and the United States. Apple is at increasing risk at a time when these countries are struggling to combat the public health crisis. As hotels, airlines and hotels suffer from travel bans, the U.S. alone expects to lose as many as 5 million jobs this year. According to the latest data released by Johns Hopkins University in the United States, there are now 69,197 new confirmed cases of coronavirus in the United States.
Confirmed cases in the U.S. approach 70,000
Apple’s shares have fallen about 15 per cent in the past month, according to FactSet, a financial data provider, in line with declines in peers such as Microsoft and Facebook, but below the 28 per cent decline in the Standard and Poor’s 500 index.
Apple CEO Tim Cook has encouraged employees not to worry about the company’s challenges in an email. He noted that Apple is ready for the moment and will continue to invest in the future. Apple currently holds about $200 billion in cash and cash equivalents.
At the same time, Apple is continuing its plans for software updates and new product launches, including the new MacBook Air and iPad Pro. Apple is also trying to boost app sales, expanding the App Store app store to 20 new countries.
The 5G era is coming
In the face of rapidly changing consumer behavior, Apple is under particular pressure to order the right number of components as it moves into the 5G era. Analysts say 5G phones, which require more expensive basebands and more storage space, will raise the cost of materials per phone by $100.
Mehdi Hosseini, an analyst at Heiner International, said the excess baseband components or the unsold 5G version of the iPhone could eat into Apple’s lucrative profit margins, which helped apple become the first Us company to have a market capitalisation of $1 trillion. He expects Apple to allow component suppliers to continue making iPhone parts as planned and then re-evaluate demand in May or June.
Foxconn, Apple’s Chinese foundry, has resumed operations, but the California-based “in-place asylum order” forced Apple employees to telecommute, complicating the normal operation of the company. Apple’s operating mechanism has long guided iPhone development.
For now, Apple is working to prevent the product from delaying its release. Unable to travel to China, Apple’s U.S. engineering team is using a video phone to guide chinese colleagues in assembling the iPhone prototype at its Asian plant, people familiar with the matter said. Apple put the program on trial in January.
Apple last week began allowing some engineers to bring home prototypes of future products, people familiar with the matter said. It’s an unprecedented move for a company that has fired software engineers from programming off campus to use security personnel to ship future iPhone models. Apple has asked employees not to discuss the new rules.