The outbreak has affected supply chains, and iPhone repairs may be difficult. Apple has warned its retail staff that iPhones used to replace customers will face a shortage of supplies, and there will be a shortage of individual parts needed for phone repair at some of the company’s retail stores, Bloomberg reported. Supply shortages are expected to last for two to four weeks.
On the question of whether there is a shortage of spare parts or an impact on maintenance at The Apple Store, first financial reporter asked Apple for confirmation, as of the time of writing, has not yet received a response.
Apple has warned investors that the supply chain is slowing down as a result of the outbreak and will not meet its sales targets for the current quarter.
Apple’s retail stores in Beijing, Shanghai and other cities have resumed operations. But Apple’s supply chain is still back in action than expected. Apple warned on February 17th that “although all iPhone production facilities in China have been restarted, Apple still expects a global supply shortage for the iPhone.” “
Many employees in Apple’s supply chain are unable to return to work because of travel and quarantine restrictions. Apple has also restricted travel to Italy and South Korea.
Apple had been expected to release a new low-cost iPhone this spring, possibly named the iPhone SE2. Apple usually releases its new flagship iPhone model in September. But the current new aircraft launch plan also faces huge uncertainty.
Research firm Canalys expects China’s smartphone shipments to halve in the first quarter from a year earlier, while IDC, another research firm, expects a 30 per cent decline.
Analysts believe Apple’s suppliers and competitors, who are equally highly dependent on the Chinese market, could also be affected if it expects a global supply shortage.
Stacy Rasgon, an analyst at Bernstein, a research firm, believes Apple’s woes could also mean fewer chip sales across the mobile device industry, where most chips are made in China.
The impact on Apple’s supply chain is already being felt. Qorvo, the supplier that makes radio frequency chips for Apple’s iPhone, cut its revenue forecast for the fourth quarter this week. Qorvo on Tuesday cut its fourth-quarter revenue forecast to $770 million, down from an estimate of $800 million to $840 million at the end of January.
About a third of Qorvo’s revenue for fiscal 2019 comes from Apple. Skyworks, another wireless device supplier, receives more than 10% of apple revenue.
Foxconn, Apple’s iPhone maker, said recently that it had reached 50 percent of its seasonal demand capacity, and that under current plans it expects to reach full seasonal capacity by the end of March. But Foxconn warned that “there is still a lot of uncertainty and we cannot quantify its potential impact for the full year.” “
“The more affected aspects of the mobile chip supply chain are labor-intensive suppliers, such as semiconductor packaging testing, and the production automation of the chip itself is already high and the impact of the slowdown in re-engineering is less than it has been,” Li Shu, Bain’s global partner and chairman of TMT in Greater China, told First Financial. “
Li Shu told First Financial Reporter that the bigger challenge comes from logistics. “For example, chip production is in Chongqing, mobile phone assembly in Guangdong, then if the outbreak continues to grow longer, the equipment accessories in the transport of the impact will be further reflected, may lead to new release rhythm and domestic and foreign customer supply plans are disrupted.” Li Shu told the first financial reporter.
A new report by Bain shows that the impact of the outbreak on the smartphone supply side will face some pressure in the short term upstream supply chain, which will have an impact on the pace of hand-release and contract layout of manufacturers in the medium and long term. From the demand side, a short-term decline in mobile phone sales will be inevitable, but the rigid replacement demand accumulated in the early period is expected to gradually begin to release within 1 to 2 months after the outbreak. From the channel end, offline agents affected by the outbreak, medium and long-term will accelerate the transfer of sales channels to the line.
Gartner, a research firm, cut its overall global semiconductor revenue forecast by $10.8 billion this year, cutting growth to 9.9 percent from 12.5 percent. According to the report, the semiconductor industry as a whole will decline in the first half of this year, the second half of the slow recovery.
Gartner analyst Sheng Linghai told First Financial: “The production of semiconductor devices, 85% of the production capacity is in the market outside China, even if China’s slow resumption of work on the chip production pressure is not great; PCB board or antenna, glass and other accessories, if one or two affected, then it is possible that all products can not be completed. “
Gartner cut its shipments of 5G phones this year, cutting its original forecast by 9.4 percent, or 21 million fewer than it originally thought. Gartner expects 5G handsets to account for 80 percent of global shipments in the second half of this year.