Apple's iPhone 12 Preparations May Be Delayed Due to Coronavirus Travel Restrictions

[MacRumors]

At this time of year, Apple engineers and executives typically visit China as Apple's suppliers start getting ready to manufacture new iPhones, but that preparation process is delayed this year due to coronavirus travel restrictions, reports Reuters.

Production of new devices usually kicks off in the summer, but during the first months of the year, Apple employees visit China to perfect assembly processes with manufacturing partners like Foxconn. Reuters spoke to former Apple employees who said that it "could be bad" if Apple's engineers haven't been able to meet up with Foxconn engineers in China to plan iPhone 12 production.

"They probably have one assembly line they're trying things out on," said one of the former employees who asked not to be named discussing production matters.

"Are Apple's engineers with the Foxconn engineers? If they are, they're probably making progress. But if they're not, if they're quarantined, that could be bad."

People familiar with Apple's process for device prototyping to manufacturing said that work typically picks up after the Lunar New Year. By February, Apple is normally in the late stages of engineering validation, where Foxconn workers assemble a small number of devices and the manufacturing process is reviewed.

Reuters says that delays at this stage can eat into the time Apple needs to finalize orders for chips and other iPhone components that need to be made well in advance of when full production begins.

In March and April, Apple and Foxconn engineers work together to set up assembly lines and do trial runs, with final adjustments coming in April and May. One person familiar with Apple's process told Reuters that it's "very complicated" and there are "so many variables in the environment."

Supply chain experts have said that Apple still has time to keep the iPhone schedule on track, but the travel restrictions have made it difficult.

"There is no face-to-face work being done," an executive at a semiconductor firm that supplies smartphone companies and works with teams in China said, speaking generally about phone production cycles.

"And the word is, that's probably not going to change for another month at best. You're really talking about two lost months, which in the consumer electronics cycle is huge."

Foxconn and other Apple suppliers were shut down for multiple days in February and while factories are now up and running, they're not operating at full production capacity due to labor shortages, travel restrictions, and quarantines. Senior Foxconn officials are working remotely from Taipei and have not returned to China on a large scale.

U.S. airlines like United, which Apple often uses, have also suspended many flights to China. United will not be resuming flights to Beijing, Chengdu, Hong Kong, and Shanghai until April 24. People who do visit China are also subjected to health screenings and other restrictions when returning to the United States.

Apple has already warned investors that it will not be able to meet revenue goals for the March quarter due to device shortages and store closures in China, which have impacted device sales, and the company will provide additional info on the impact of the coronavirus during its April earnings call.

Article Link: Apple's iPhone 12 Preparations May Be Delayed Due to Coronavirus Travel Restrictions

 

[anthogag]

Perhaps Apple should make iPhones in NA.

 

[iRun26.2]

I wonder how much of a delay there will be to the upcoming 13” MacBook Pro that is rumored.

(sorry for the unrelated post)

 

[Freida]

Right, with a price tag of $3k. Sure
Any more sensible comments?

Perhaps Apple should make iPhones in NA.

 

[newyorksole]

Everything was looking so good for 2020... Until this virus hit. Doom and gloom everywhere

 

[anthogag]

Right, with a price tag of $3k. Sure
Any more sensible comments?

No, same price. Why would it cost $3K? Apple is saying parts for the iPhone are made all over the world. It is assembled in China.

 

[unobtainium]

that it "could be bad" if Apple's engineers haven't been able to meet up with Foxconn engineers

Have they ever heard of FaceTime?

 

[dazz87]

Perhaps Apple should make iPhones in NA.

but that will eat into the profit......

 

[m0sher]

So this could be the year that they will not release in October. I bet you we have a November release this year.

 

[macduke]

I honestly feel like I’ve had Covid-19 the past few days. Easily the worst flu I’ve ever had. Felt like I was dying my body hurt so bad everywhere. Fortunately I’m in a central state with no reports and I work from home so it’s really unlikely. But wow it was bad. At one point when I was coughing it felt like I was drowning. Seem to have turned a corner after waking up this afternoon.

Makes me wonder how many fit and healthy people are carrying it and just think it’s a really bad flu? Somehow my kids haven’t gotten it so far which is amazing. All this stuff worries me since my daughter had been hospitalized for respiratory issues in the past (RSV) and has asthma so she seems more susceptible to Covid-19 possibly killing her.

 

[Peza19]

Everything was looking so good for 2020... Until this virus hit. Doom and gloom everywhere

im sorry to say, I do not believe we have seen the half of it yet... their is a high possibility of a global recession due to so much shutdown and restriction on movement, I believe a trillion dollars have already been wiped from global stock markets this week alone due to the virus. Plus the human lives that will be lost to it. Not particularly good, especially if indeed the virus was accidentally let out from a laboratory.

 

[JPack]

Perhaps Apple should make iPhones in NA.

It's like trying do an Olympic marathon when you can't even crawl.

There's not even a single LCD plant of any generation in North America.

 

[Freida]

Because the labour is cheap. The price would be crazy if it was in NA.

No, same price. Why would it cost $3K? Apple is saying parts for the iPhone are made all over the world. It is assembled in China.

 

[djcerla]

Last week I sold all of my very-long held AAPL stock after
1) a trip to Singapore. You can really feel the economic crunch there. And
2) Gruber’s post about Apple’s employees unable to fly to China for new products preparations.

Apple’s story remains strong (“the best business I know”, Warren Buffett), but we’re in for a rough ride.

 

[Michael Scrip]

Because the labour is cheap. The price would be crazy if it was in NA.

I know we always hear that... but what are some actual numbers?

Pretend I know nothing about modern assembly factories. I realize there are multiple people who are involved in assembling each product... and that hourly wages range wildly in different parts of the world.

So how much does labor factor into the price of a $2,000 laptop or a $1,000 phone?

 

[CouldBeWorse]

Perhaps Apple should make iPhones in NA.

Easier said than done. Besides the cost of labor, most of the supply chain is located in East Asia. It’s logistically easier to assemble phones in China than it would be in the U.S. If the U.S. really wanted smartphone manufactures to move here, they would convince their suppliers to do the same.

 

[AustinIllini]

but that will eat into the profit......

Also, America sucks that this volume of manufacturing

 

[Freeangel1]

you should have moved your iPhone factory to Vietnam Tim Cook
All their coronavirus patients are cured. not sure how as a vaccine not public yet
Cheap labor in Vietnam
And vietnam not practicing war games against the USA like Russia and China are currently doing

Looks like Samsung Galaxy S20 is going to sell a ton of phones! with no iPhone 12 competition

 

[CWallace]

Perhaps Apple should make iPhones in NA.

So many components are sourced from Chinese suppliers that the final assembly point would likely still be impacted due to lack of parts regardless of where it is located.

 

[JPack]

I know we always hear that... but what are some actual numbers?

Pretend I know nothing about modern assembly factories. I realize there are multiple people who are involved in assembling each product... and that hourly wages range wildly in different parts of the world.

So how much does labor factor into the price of a $2,000 laptop or a $1,000 phone?

IHS estimates the labor cost of an iPhone 7 is $5. This includes assembly and testing.

China owns the supply chain and has a lot of R&D expertise. For example, AirPods wouldn't be possible without Luxshare-ICT. That company in China designs and manufactures small acoustic components. There's no other company like that in the world.

So much of assembly in China is already automated. Tim Cook dispelled the myth a couple years ago:

"There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to but the truth is China stopped being the low labor cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is."​

​

​

 

[Think creative]

yet another sign I may just buy the iPhone 9 when it comes out and upgrade in three years... At least those will likely still come out.

 

[dredlew]

That’s what happens when you put all your eggs in one basket. They should have moved out of China a long time ago and diversified amongst other locations.

And yes, it’s possible for an assembly in the US as well. Start automating more processes to bring the costs down. They can assemble the Mac Pro, they can assemble other items too.

 

[Michael Scrip]

IHS estimates the labor cost of an iPhone 7 is $5. This includes assembly and testing.

China owns the supply chain and has a lot of R&D expertise. For example, AirPods wouldn't be possible without Luxshare-ICT. That company in China designs and manufactures small acoustic components. There's no other company like that in the world.

So much of assembly in China is already automated. Tim Cook dispelled the myth a couple years ago:

"There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to but the truth is China stopped being the low labor cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is."​

​

​

Ohhh I see. Thank you!

So instead of the often used statement "Labor is cheap in China... it would be expensive anywhere else..."

It should be "This type of labor is ONLY available in China... and would be IMPOSSIBLE anywhere else..."

That's quite a different tune than what people usually say here...

I'm gonna bookmark Tim's quote... it will be useful when this discussion comes up again!

 

[Freida]

Labour, rent, electricity etc.
All these contribute to higher prices because there is a difference in China and NA (or rest of the world)
Hence why almost everything is made in China. Sad reality
Those workers live on few $ a day. So the money you spend on lunch each day is probably the same the person earns in a day/week.

Calculate other costs etc. and suddenly you have a different story.
Hence why only Mac Pro is made in USA as the product itself is super expensive so the cost offset is kinda hidden. And only for the NA market. The other markets are made in China.

I know we always hear that... but what are some actual numbers?

Pretend I know nothing about modern assembly factories. I realize there are multiple people who are involved in assembling each product... and that hourly wages range wildly in different parts of the world.

So how much does labor factor into the price of a $2,000 laptop or a $1,000 phone?

 

[triton100]

So this could be the year that they will not release in October. I bet you we have a November release this year.

November ? That’s extremely optimistic. It won’t be released this year.
[automerge]1582680030[/automerge]

I honestly feel like I’ve had Covid-19 the past few days. Easily the worst flu I’ve ever had. Felt like I was dying my body hurt so bad everywhere. Fortunately I’m in a central state with no reports and I work from home so it’s really unlikely. But wow it was bad. At one point when I was coughing it felt like I was drowning. Seem to have turned a corner after waking up this afternoon.

Makes me wonder how many fit and healthy people are carrying it and just think it’s a really bad flu? Somehow my kids haven’t gotten it so far which is amazing. All this stuff worries me since my daughter had been hospitalized for respiratory issues in the past (RSV) and has asthma so she seems more susceptible to Covid-19 possibly killing her.

You didn’t think to get tested???