Apple ((AAPL – Free Report) should now delay the launch of its first 5G-compatible iPhone device, according to an article by Nikkei Asian Review. The company typically updates its iPhone portfolio in September each year.
The rumor that Apple plans to delay the launch of the iPhone 5G can be attributed to supply chain constraints as well as expectations of sluggish demand due to the significant impact of coronaviruses on the economy.
Global smartphone sales fell 14% in February, according to a Reuters report citing data from Counterpoint Research. Sales in China plunged 38% year over year. Apple is said to have sold 494,000 iPhones in China during the month, down 61% from 1.3 million a year ago.
In particular, as factories in China have resumed operations, Apple faces falling demand while countries around the world are locked out.
For example, suppliers to Apple Foxconn and Wistron Corp. blocked production in their Indian factories, which mainly supply domestic markets after a national foreclosure until April 14. Although India is not a huge market for Apple, the shutdown of production should disrupt its iPhone supply in the short term.
Apple shares have fallen 16.4% since the start of the year, largely due to the impact of the coronavirus. In mid-February, management said it may not be able to meet its quarterly revenue expectations released on January 28, 2020 due to the disruption in the iPhone supply chain. Earlier forecasts for the technology sector’s second quarter fiscal year 2020 revenues were between $ 63 billion and $ 67 billion.
Apple is slow to introduce 5G on iPhone
Apple is slow to introduce 5G on its flagship iPhone devices compared to Samsung and Huawei. In particular, Samsung delivered more than 6.7 million Galaxy 5G smartphones worldwide in 2019, far better than its expectation to sell 4 million devices during the year.
Apple has stepped up recruiting from Intel (INTC – Free Report) and Qualcomm (QCOM – Free Report) to work on 5G modems. In addition, starting in 2021, all iPhone models should support 5G. Qualcomm and Broadcom (AVGO – Free Report) are expected to supply 5G modems and RF power amplifiers, respectively.
In particular, Apple, which has a Zacks Rank # 3 (Hold), will probably have its own modem by 2022 or 2023, which will reduce its dependence on Qualcomm. You can see the full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
However, the coronavirus-induced interruption can now place Apple further than Samsung in the space of the 5G compatible smartphone. Samsung is expected to take advantage of a first-in-5G compatible handset for some time, leveraging its solid portfolio.
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