Ming-Chi Kuo Says Coronavirus Outbreak Impacting iPhone Supply, Lowers Shipment Forecast

[MacRumors]

Apple analyst Ming-Chi Kuo has lowered his iPhone shipment forecast by 10 percent to 36-40 million units in the first quarter of 2020, noting that the Wuhan coronavirus outbreak is affecting iPhone supply in China.

For example, multiple reports have indicated that assembly of the rumored "iPhone 9" or "iPhone SE 2" could be disrupted. The lower-cost device, expected to be a revamped version of the iPhone 8, was rumored to enter mass production in February ahead of a March release. Apple could still announce the device in March, but initial supply could be limited until production can ramp up.

In his research note with TF International Securities, seen by MacRumors, Kuo added that smartphone shipments in the Chinese market declined by 50-60 percent year-over-year during the Chinese New Year holiday period, possibly due to declining consumer confidence in the country stemming from the coronavirus outbreak.

Out of an abundance of caution, Apple said it has closed all of its corporate offices, stores, and contact centers in mainland China through at least February 9 due to the coronavirus outbreak.

Earlier this week, the World Health Organization declared the Wuhan coronavirus outbreak a global public health emergency. More information about the virus and how to protect yourself is available on its website.

Article Link: Ming-Chi Kuo Says Coronavirus Outbreak Impacting iPhone Supply, Lowers Shipment Forecast

 

[now i see it]

with the extremely close living quarters in the dorms at some assembly places, I suspect we haven't even begun to see the impact of this horrible scourge

 

[DeepIn2U]

with the extremely close living quarters in the dorms at some assembly places, I suspect we haven't even begun to see the impact of this horrible scourge

Indeed! But with many smartphone manufacturers having assembly contracts with Hon-Hai (aka Foxxtron) we'll see them hit as well: Samsung, Sony, brands under BBK (Oppo, One+, etc).

Since Apple already forecasted this - we should see a bottom to last week's dip in stock price stabilize.
The rumoured timing for iPhone SE2 in the next 60 days should be just about right (in India) as this scourge gets controlled.

 

[dannyyankou]

Reminder that the flu kills 36,000 Americans every year.

 

[EVGabe]

This is why it's a bad idea to have a huge portion of your supply chain in one place. I hope this will prompt Apple to shift at least some of the supply chain to places like Taiwan, Vietnam, India, or maybe even the United States!

Especially the US. Apple has more than enough cash on hand to do so.

 

[Rogifan]

Ah yes that time of year when we get all the iPhone production issues rumors.

 

[gnasher729]

Reminder that the flu kills 36,000 Americans every year.

Reminder that the number of coronavirus infections more than doubles every week.

Reminder also that the numbers will very strongly depend on the actions taken. The best case is to do everything possible to slow it down, and it ends up being harmless, and everyone looks stupid for taking strong actions. The worst case is doing nothing and in a year's time we are all infected.

 

[Blackstick]

Pretty bad. I ordered a custom camera strap from a province 1800 kilometers away from Wuhan. Closed until further notice per the owner’s email, local post office not even open.

 

[NavySilver]

This is why it's a bad idea to have a huge portion of your supply chain in one place. I hope this will prompt Apple to shift at least some of the supply chain to places like Taiwan, Vietnam, India, or maybe even the United States!

Especially the US. Apple has more than enough cash on hand to do so.

Taiwan & the US: Labor intensive productions are unlikely given how high wages are in these two places.

India: Too much governmental bureaucratic hoops to jump through; Apple and its suppliers are making some progress but I believe it will take plenty of time before the supply chain system is well-established.

This leaves Vietnam as the most viable option for now, and in reality, Apple is attempting to dip its toes into the water by moving some AirPods production there already.

 

[sw1tcher]

Indeed! But with many smartphone manufacturers having assembly contracts with Hon-Hai (aka Foxxtron) we'll see them hit as well: Samsung, Sony, brands under BBK (Oppo, One+, etc).

Not Samsung. Not Sony.

And I believe you mean Foxconn, not Foxxtron... unless there's some inside joke I'm not aware of.

https://www.reuters.com/article/us-...obile-phone-production-in-china-idUSKBN1WH0LR

Samsung ends mobile phone production in China​

​

October 2, 2019​

​

SEOUL (Reuters) - Samsung Electronics Co Ltd has ended mobile telephone production in China, it said on Wednesday, hurt by intensifying competition from domestic rivals in the world’s biggest smartphone market. ​

​

The shutdown of Samsung’s last China phone factory comes after it cut production at the plant in the southern city of Huizhou in June and suspended another factory late last year, underscoring stiff competition in the country. ​

​

The South Korean tech giant’s ceased phone production in China follows other manufacturers shifting production from China due to rising labor costs and the economic slowdown. ​

​

Sony also said it was closing its Beijing smartphone plant and would only make smartphones in Thailand. ​

​

But Apple still makes major products in China. ​

​

 

[44267547]

It’s affecting more than just the iPhone, it’s probably the majority of manufacturing in China right now. There’s probably only so many precautions you can take given how overly-populated China is. I can only imagine how overwhelmed their out reach/medical centers are with staff shortages/lack of resources.

 

[MacLawyer]

This is a terrible development for victims and their families. I can wait a bit for iPhone SE. Get better folks.

 

[DelayedGratificationGene]

Ah yes that time of year when we get all the iPhone production issues rumors.

Yes indeed.

Ah yes that time of year when we get all the iPhone production issues rumors.

lol...happens every year!

 

[480951]

Reminder that the flu kills 36,000 Americans every year.

Reminder that the WHO doesn't declare a global emergency for the normal flu and China doesn't normally quarantine cities of 36 million (while building two hospitals on site) for the normal flu either. That stat means nothing as well without comparing survival rates among those affected, of which the coronavirus is (currently) around 6-10x more lethal. You're also comparing an entire years stats to roughly a month.

I keep seeing this stat posted but I'll trust the scientists, epidemiologists and those in power at the WHO/CDC clearly stating this is a problem over internet commenters.

 

[DeepIn2U]

This is a terrible development for victims and their families. I can wait a bit for iPhone SE. Get better folks.

thank you for showing us the true issue at hand to be concerned about. Too often we forget we all share this world and not loose site of our compassion.

 

[danny842003]

Reminder that the flu kills 36,000 Americans every year.

typically at least one American per year is shot by a dog. I’m not sure how this is relevant but just thought you could use the reminder.

 

[Cosmosent]

Worst case scenario for AAPL:

NO 2020 iPhones are produced in China this year.

If that happens, the stock will drop by more than 2/3, & trade under $100/share.

 

[[AUT] Thomas]

This is why it's a bad idea to have a huge portion of your supply chain in one place. I hope this will prompt Apple to shift at least some of the supply chain to places like Taiwan, Vietnam, India, or maybe even the United States!

That's not going to fix it. You would need redundant production of same parts at 2 locations.
Other than that, I would really like to know how many manhours are actually involved in production/assembling a single iPhone less the logistics/transport. I would expect this to be highly automated.
At the end of the day, even Tesla made the move to build an assembly line in Germany, which is rather expensive (already taking into account that mostly Polish people will likely work there for lower wages).
So, I strongly believe we could easily afford to build silicon stuff at home than in Asia. That would also take care of the security concerns. I'd happily pay 50 bucks more for the phone if that's what it takes to manufacture locally and thus support local economy.

Reminder that the number of coronavirus infections more than doubles every week.

Reminder also that the numbers will very strongly depend on the actions taken. The best case is to do everything possible to slow it down, and it ends up being harmless, and everyone looks stupid for taking strong actions. The worst case is doing nothing and in a year's time we are all infected.

The problem is that everything is happening REactive rather than PROactive.
It may look stupid if we enforce a travel ban for passenger flights to and from China AND countries that still have flights operating there (because banning direct flights only is halfway useless), but making an assumption that it only becomes contagious after symptoms, that IMHO is stupid.
Anyway, at this stage I'd just remove the VISA-free entry for now as that takes away a lot of control for countries who is actually allowed to board a flight (and basically will slow down air travel over the next couple weeks to a fraction of people paying for express VISA). Want to travel somewhere? Apply for a (incl. Transit) VISA first. State your travel history. Wait for VISA to be issued -or denied. That worked well for decades...
The real question, that has not been answered yet is: Does an nCoV infection provide immunity. If yes, for how long and against which other CoV.

 

[ryanwarsaw]

Worst case scenario for AAPL:

NO 2020 iPhones are produced in China this year.

If that happens, the stock will drop by more than 2/3, & trade under $100/share.

I just closed my entire position on AAPL based on your post. I shall wait until the stock goes below $100 before jumping back in.

 

[Jimmy Bubbles]

What happens if the coronavirus kills all of the slaves that make Apple Products?

 

[code-m]

Reminder that the number of coronavirus infections more than doubles every week.

Reminder also that the numbers will very strongly depend on the actions taken. The best case is to do everything possible to slow it down, and it ends up being harmless, and everyone looks stupid for taking strong actions. The worst case is doing nothing and in a year's time we are all infected.

Not to downplay both sides, however this issue or question was brought up to an infection specialist and this was their response (non-verbatim):

Though the number of infected and victims of 2019-nCoV, we have to remember that as the present infected is "small" the percentage seems large, however as more are infected (unfortunately) the percentage will be adjusted and will actually see a drop.

For example if you compare the percentage of people infected with the cold/flu annually on a Global scale compared to 2019-nCoV comparison on a scale that is not Global then the numbers and percentage tells a different story.

2019-nCoV infection and death plus there have been recoveries too, is still quite low on a Global scale. This is all precaution as most of the world manufacturers in China and to some degree the media seems to be overreacting. It is serious similar to other prior outbreaks but not what it is being made out to be, remember there have been recoveries too but those are not being reported similar to the death and infected that adds a level of fear for media ratings.

 

[code-m]

Reminder that the WHO doesn't declare a global emergency for the normal flu and China doesn't normally quarantine cities of 36 million (while building two hospitals on site) for the normal flu either. That stat means nothing as well without comparing survival rates among those affected, of which the coronavirus is (currently) around 6-10x more lethal. You're also comparing an entire years stats to roughly a month.

I keep seeing this stat posted but I'll trust the scientists, epidemiologists and those in power at the WHO/CDC clearly stating this is a problem over internet commenters.

While I am not dismissing either commenters posts, there are reasons why the WHO has declared it a Global Emergency, for one we simply do not know a lot about 2019-nCoV, there have been many infected, some deaths (mainly China) and some recoveries. If this is some pandemic as what most of the media is making it out to be there would be NO RECOVERY. We also do not have all the facts, how many who have been infected resulting in death are elderly, infants or those with a weakened immune system. How many infected with a strong immune system have resulted in full recovery or death.

You see statistics can paint whatever picture that wants to be portrayed, while I am not discounting this virus, we simply do not know enough to just play "chicken little". Human and animals have been infected with viral, bacterial and parasitic infections, some take many lives some live in harmony and other well take no lives, that is how biology works, nothing can be protected and safe 100% and that says something as we all die.

Stop with the fear mongering already.
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What happens if the coronavirus kills all of the slaves that make Apple Products?

Most companies already have robots in place, due to the increase in wages. This may just slow down number of products produced daily and shipped.

 

[realeric]

Reminder that the flu kills 36,000 Americans every year.

Flu kills 0.05% of infected people. The new China coronavirus is now killing 2%. 1.4 millions will die in the US. It likes a 1 megaton thermonuclear bomb explosion at the center of New York.

 

[code-m]

I just closed my entire position on AAPL based on your post. I shall wait until the stock goes below $100 before jumping back in.

The Oracle of MacRumors "Cosmosent" has foretold the fate of Apple and its share price, if the Oracle is so knowledgable then why spend their abilities posting on a forum

 

[dontwalkhand]

Reminder that the flu kills 36,000 Americans every year.

Remember between the both of them, one of them we have a shot for. the other has no cure Or vaccine.
[automerge]1580695880[/automerge]

Worst case scenario for AAPL:

NO 2020 iPhones are produced in China this year.

If that happens, the stock will drop by more than 2/3, & trade under $100/share.

Time for me to keep Charles Schwab on speed dial, or at least the app on my front homescreen.