There have been fears among market watchers that the issue of the Coronavirus which has affected a number of provinces in China could affect companies relying on that country for supplies. Apple is one such company and has arrangements with the country for the supply of components and assembling its devices. These arrangements could go awry as the virus-infected cities are being shut down by the Chinese government to control the spread of the disease. Analyst Ming-Chi Kuo has come up with his own assessment of the extent of the impact.
First Quarter Shipments Maybe Down by 10%
According to Ming-Chi Kuo, the immediate impact could be the shipments for the Q1 of 2020. The shipments in the first quarter of 2019 were 38 million. Now Kuo says the figure will vary between 30 million and 40 million, resulting in a drop of 10% in volume terms. He has said the prevailing circumstances are such that it may not be feasible to make any prediction as far as the second quarter of the year is concerned. The much-awaited iPhone 9 could be one of the devices most affected due to the virus scare in China. The issue gets magnified when you reckon that Foxconn assembling the smartphones for Apple has a plant in Wuhan, one of the worst affected provinces in China.
Fall in Sales in the Chinese Market Expected
China has been one of the largest markets for smartphones and the Coronavirus strike is likely to pull down the sale of mobile phones in that market. While the market assessment is that the drop will be to the tune of 10% from 360-380 million units sold in 2019 to 330-350 million in 2020, Ming-Chi Kuo has placed the figure at 310-330 million. This is 15% lower than last year.
Apart from the virus issue that has rocked the country recently, the other reason being attributed to the drop in smartphone sales is said to be a drag on the adoption of 5G technology. This could be more of an Android-specific issue since Apple is yet to release its 5G devices.
Apple has created a production facility in India. However, the components have still to come from China. Supplies in the first quarter had already slowed down due to the Chinese New Year holidays earlier. Apple will have to quickly work out an alternate plan to see if the supplies can be arranged through alternate sources. Apple’s offices in the affected provinces stand closed as of now.