On Thursday, Bloomberg published a report detailing Apple’s COVID-19 related supply chain problems. Although Foxconn, the company that assembles the iPhones, has nearly returned to full production capacity, Apple’s other partners are struggling in the face of the coronavirus pandemic. As a result, the mobile device maker has limited purchases of its smartphones in some territories and might delay the release of its 5G-enabled iPhones.
Apple Supply Chain Problems
Apple depends upon a geographically diverse network of vendors to manufacture its best-selling handsets. In the wake of the COVID-19 outbreak, the firm’s supply chain has experienced profound disruption.
Earlier this week, Malaysia initiated a public lockdown to limit the spread of the coronavirus within its borders. Apple chip and circuit board suppliers Ibiden Co. Ltd., Murata Manufacturing, and Renesas Electronics Corporation have halted production at their local facilities in response. ON Semiconductor and Texas Instruments also provide Apple with components, and the government mandate will likely impact their Malaysian production capacity. Apple’s design and production facilities in Italy and Israel are also vulnerable to COVID-19 prompted disruption. The Big Tech firm has power chip factories in Italy, a country that is currently under national lockdown. The company also maintains its second-largest research and development center in Israel, which is now under quarantine.
The electronics maker’s sourcing issues have already begun to affect its retail operations, and the situation looks to be worsening.
Apple’s Constrained iPhone Inventory and Possible Launch Delays
Earlier this month, The Burn-In reported the coronavirus pandemic caused Apple to experience shortages in its supply of replacement iPhones. The firm informed its retail stores that its inventory of substitution handsets would be constrained for 2 to 4 weeks. On Friday, Reuters reported the company is now limiting online purchases of its smartphones in the United States and China.
Apple’s supply chain problems are also affecting its future product rollout plans.
Earlier this week, the company unveiled new iterations of its iPad Pro tablet and MacBook Air laptop. However, the firm’s latest offerings won’t be available for purchase until May. Apple traditionally puts its new hardware on sale shortly after their public introduction.
Wedbush Securities analyst Daniel Ives recently expressed the opinion that the Silicon Valley giant may delay the release of its next-generation handsets because of COVID-19. With supply chain disruptions across Asia, Apple may have no choice. The company reportedly intended to launch its 14th generation mobile devices this September.
Ives also predicts the coronavirus pandemic will severely impact Apple’s 2020 handset sales. The analyst believes only Apple customers who haven’t upgraded their mobile devices in 42 months will buy a new smartphone within the next 18 to 24 months. The market expert revised his previous iPhone revenue estimate down by 14 percent for this year and 10 percent in 2021.
On March 10, Bloomberg stated Apple’s Chinese mobile device sales fell by 60 percent in February. If demand for its handsets continues to fall in China and other regions, the company might be wise to hold off on releasing a new iPhone this fall.