Apple’s 5G iPhone launch might be delayed due to supply disruption, says BofA

The tech company is expected to launch its first 5G devices in September

Apple has warned investors that supply constraints and falling demand in China will dent growth, making it unlikely to meet second quarter revenue targets. AP

Apple’s new 5G-enabled iPhones, which are scheduled for a September launch, could face a delay due to supply chain disruption caused by the coronavirus outbreak, Bank of America analysts said.

“The iPhone 5G launch in the fall could see a month of delay," said BofA, in a note to investors, citing a conversation with Elliot Lan, an expert in Shenzhen on the company’s supply chain.

The company will also delay the roll-out of its lower-cost iPhone SE2 that was  expected to go on sale as early as this month.

“The launch of the iPhone SE2 will be delayed by a few months” due to “both supply issues as well as the weaker demand environment from Covid-19", said BofA.

Apple did not respond to The National's request for comments.

The company manufactures most of its iPhones and other devices in China, which is also Apple's second-biggest market in terms of sales after the US. It typically unveils its new phones in September every year and is expected to launch four new 5G iPhones this year.

BofA's analyst Wamsi Mohan said the launch timing for new models would now “depend on how production ramps in April and May”.

The prevailing travel restrictions to China have reportedly prevented Apple's engineers from visiting the  country and completing final tests before the company can begin manufacturing 5G iPhones.

But analysts predict that such problems could be solved soon.

Wedbush Securities analyst Dan Ives said in note on Monday that supply chain concerns because of coronavirus is a “shock event that will be short-lived”. He predicted that iPhone demand will normalise in the second half of the year.

Last month, Apple warned investors that supply constraints and falling demand in China will dent growth, making it unlikely to meet second quarter revenue targets.

In its earlier guidance for the three months to March 30, released on January 29, the Cupertino company projected revenue in the range of $63 billion (Dh231.21bn) to $67bn, a year-on-year rise of almost 15.5 per cent.

The tech giant, which reported a record profit of $22.24bn in its fiscal 2020 first quarter ending December 28, closed 42 stores in China because of the epidemic.

However, 38 of those opened again after a prolonged shutdown, CNBC reported on Monday.

Propelled by the strong demand for its iPhone 11, Apple sold 70.7 million devices in the three months to December, grabbing 19 per cent of the global market share, according to researcher Strategy Analytics. It was followed closely by Samsung with an 18.4 per cent market share and China’s Huawei, which had a 15 per cent share.

Apple, though, is relatively late in launching a 5G phone compared with its rivals which launched a 5G model last year. Samsung said it sold more than 6.7 million 5G phones worldwide in 2019, while Huawei said it sold 6.9 million devices during the period.

A 5G network promises an internet speed of up to 1.2 gigabits per second, which will gradually reach 10Gbps — more than 100 times faster than 4G. It also offers a latency of less than a millisecond, compared with 20 milliseconds for 4G.