Apple reportedly plans to slow down production of 5G iPhones
Apple is slowing down the production of its first 5G iPhones, the Wall Street Journal reports, with ramp-up production of the flagship phones coming about a month later than expected. The report is the latest indication of the significant impact the COVID-19 pandemic is having on Apple and the smartphone market overall.
Apple typically ramps up production of new iPhone models in early summer, to build up inventory in August ahead of a September release. This year, that ramp-up will be pushed back about a month, according to the Journal. Additionally, one unnamed source told the Journal that Apple is cutting back the number of phones it plans to produce in the second half of 2020 by as much as 20 percent.
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Earier reports also suggested the release of the 5G iPhone could be delayed.
IPhone sales, which came to nearly $56 billion in Q1, account for more than half of the company's revenues. At the start of the year, analysts expressed optimism that the release of the first 5G iPhone would drive a healthy iPhone upgrade cycle.
In February, however, Apple acknowledged that the spread of the new coronavirus is taking a toll on both consumer demand and its supply chain. Its revenue for the current quarter won't meet previous estimates, Apple said. The Cupertino company is slated to release its latest financial report on Thursday.
Meanwhile, IDC said earlier this month that the worldwide smartphone maket is likely to decline in 2020 because of the pandemic, with Apple devices taking the brunt of the hit in the short term. iOS devices could see a 2.5 percent drop in shipments in 2020, compared with the year prior, IDC said. However, the research firm does expect the market to return to growth in 2021.
Strategy Analytics is similarly forecasts a decline in smartphone sales this year with a solid recovery in 2021. The research firm also noted there are still "many positive signs" for the growth potential of 5G networks. 5G network launches continued across the globe even as the scale of the outbreak became clear, the research firm noted. In the US, 5G investment plans remain strong.
"While operators in countries under national lockdowns are prioritizing their engineering operations on network maintenance over network upgrades, 5G rollout is still happening and operators will need to be ready to support the upturn in 5G device sales in H2 2020," Strategy Analytics said.