Apple Ponders Postponement of 5G iPhone Roll Out by Months

Apple Ponders Postponement of 5G iPhone Roll Out by Months
March 27, 2020

 

Apple Inc (Nasdaq: AAPL) is taking necessary steps to postpone the rollout of its first 5G enabled iPhones as the COVID-19 disease continues to spread like wildfire across the globe and unsettles the tech giant’s product designing timeline. The news reported by Nikkei Asian Review was echoed by Wedbush analyst Daniel Ives who also believes that it is “extremely unlikely” that the iconic iPhone manufacturer will unveil 5G enabled smartphones in September or October. The stock closed at $258.44, up $12.92 or 5.26% from the prior close.

According to news reports, the Cupertino, California-based Apple has conducted an in-house meeting to decide the postponing of the 5G iPhone launch by several months as the company continues to face supply chain issues. The company is expected to announce its decision by May at the latest. Apple had earlier planned to introduce 5G enabled iPhone in September.

An unnamed source having who has a clear idea of what is going on at the management level has stated as follows: “Supply chain constraint aside, Apple is concerned that the current situation would significantly lower consumer appetite to upgrade their phones, which could lead to a tame reception of the first 5G iPhone. They need the first 5G iPhone to be a hit.”

Apple is already lagging behind its major competitors, Samsung and Huawei, by almost a year in launching a 5G enabled smartphone. In January, the company directed its subcontractors to get ready to manufacture 100 million pieces of new gadgets this year and designed four models of cellphones.

However, currently, Apple is tracking coronavirus related developments in the US and Europe, its major markets accounting for over 50% of sales, and evaluating whether a postponement is required. As per the California government’s ‘shelter in place’ order, a significant portion of employees at the company’s central office are working from home. Until that order is lifted, sources indicate, the 5G iPhone roll out date will not be decided.

A source said, “Apple will make a final decision around May at the latest, given the fluid situation globally.”

Travel restrictions have toppled the plans of the engineering department, which is tasked with the 5G iPhone development.  Earlier, Apple intended to build a solid model for the upcoming iPhones from March, but had to suspend the initiative as it necessitates first-hand testing.  Interestingly, Apple is yet to inform its supplies of a likely change in the production plan. The company has suggested suppliers catch up on time lost due to coronavirus associated discontinuities.

Nikkei’s source has stated: “We are not giving it up yet. We are doing whatever we can to sort the issue out. The discussion is still at an early stage, and the fall launch is not completely off the table. But the 5G iPhone could be postponed to 2021 in the worst-case scenario.”

Some component suppliers have informed Nikkei that they have been asked to postpone the bulk production timeline by two to three months.

An unnamed component supplier revealed the following info to Nikkei: “We have been notified to start shipping in big volumes to meet Apple’s new product launch by the end of August, instead of like in previous years, when it would be sometime in June. The change was made very recently, and that could imply that the mass production of the phone could also be delayed for months.”

Postponing the release of 5G enabled iPhone until 2021 would affect the company’s long-term course of action for new product launches. The company’s hundreds of suppliers in Japan, China, Europe, South Korea, and the US will be impacted by Apple’s decision.

Commenting on news reports, Joey Yen, an analyst at IDC, said, “If any big tech company like Apple delay its plan for important new products … the issue could be even bigger than whether the supply chain could meet its schedule. It implies that they really see end demand weakening and the whole economy not recovering soon. As of now, we are still hoping everything can gradually recover to normal by the end of this year, but for now, the scenario is moving toward the pessimistic side, that the global economy could be significantly impacted.”

Ives at Wedbush also believes that the company will not be able to launch 5G enabled headsets by September. The analyst has pointed out ongoing supply chain problems and the travel restrictions that have practically ended the company engineers’ movement back and forth between the US and China.

In spite of the aforesaid concerns, Wedbush continues to maintain a ‘buy’ rating with a target price of $335 per share. The equity research firm views 5G enabled phones as a long-term tailwind.

The news of likely postponement of the 5G enabled iPhone launch is expected to keep the stock range-bound with a bearish bias.

Technically, the stock remains range-bound between 210 and 270. The MACD indicator also has a negative reading. Therefore, we are anticipating the stock to move down in the short-term.

aap - technical analysis - 27th March 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins


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