Apple’s factories are running, but suppliers wary about iPhone demand

Apple’s factories are running, but suppliers wary about iPhone demand

With China reopening its economy after months of freezing, Apple Inc’s iPhone factories are largely operational. But now that the coronavirus pandemic is spreading around the world, the pressing question is how many buyers there will be for both the current models and the new range of phones expected in the fall.

A senior official at one of Apple’s major contract assemblers said Apple’s quarter ending in March is likely to decline 18% compared to the previous year. Production of new phones that work with next-generation 5G networks has been delayed, this person said, although it is still possible that the 5G phones may launch in the fall as planned. “No one is talking about manpower or material shortage anymore (in China). Now everyone is looking at whether the demand from the US and Europe can keep up,” said the person, who knows the matter directly. “The focus is now on consumer demand in the United States and Europe.”

One of the major display suppliers is preparing for a similar degree of contraction, according to one person who knows the matter. The company expected to supply 70 million iPhone screens this year, but is now considering reducing that target by more than 17% to 58 million units. The company also plans to reduce the workforce at Apple-designated production lines at its Vietnam factory, where displays are mounted before going to China to be put into phones, this person said.

Apple declined to comment on this story. Earlier this month, the company closed stores around the world, even as it reopened stores in China. With much of Europe and the United States closing and unemployment rising worldwide, there is little clarity about when demand could return.

The company may also face further supply chain issues as countries such as Malaysia and Vietnam impose new restrictions to fight the corona virus. “Things are changing day to day due to supply chain disruptions, so it’s difficult to make a meaningful comment about both supply and demand at the moment,” said an official at one supplier in Malaysia.

OUTLOOK OF FOG-ASKED QUESTION In January, Apple revoked its March sales forecast, without giving a new one. Shares have fallen by more than 15% since the beginning of the year.

“Our baseline scenario assumes a shock to demand in the June quarter with steadily improving results” in the second half of the year rather than a “V-shaped” recovery, Canaccord Genuity analyst Michael Walkley wrote in a letter to investors 18th of March. Taipei-based technology analyst Arthur Liao of Fubon Research lowered forecasts for iPhone shipping for the first quarter of this year to 35 million units, down 17% from 41 million units a year ago. The company lowered its overall forecast for iPhone shipping for 2020 to 198 million, compared to an earlier forecast of 204 million.

In any case, in the United States, consumers seem unsure whether they will resume spending. In a March 18-20 survey by Civis Analytics on more than 2,600 American adults, more than half of respondents said they planned to spend about the same on consumer electronics as before the virus outbreak, if the situation is mitigated in the coming weeks # But as the situation worsens, respondents were equally divided, with about a third each saying they would spend less, the same, or more on consumer electronics when conditions returned to normal.

Such ambiguity has made it difficult for Apple suppliers to estimate how 2020 will progress. A sensor iPhone manufacturer said the company continues to manufacture and ship parts for Apple devices, and the first quarter ended March was better than last year, and the second quarter is also likely to be higher than it years before.

“We got a prediction for this quarter for the pandemic about a month ago,” said a person familiar with the sensor vendor’s situation last week. & # 39; And now we still produce according to the prediction given to us. & # 39;

(This story has not been edited by staff and is automatically generated from a syndicated feed.)

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