iPhone Suppliers Are Worried About Lower Component Orders from Apple

iPhone 11 Pro

Reuters report highlights that Apple factories in China have reopened after months of lockdown due to coronavirus. However, many suppliers are worried about the demand of iPhone waning as the global economy comes to a screeching halt due to the pandemic.

The waning demand is going to affect sales of Apple’s existing iPhone 11 lineup as well as the 5G iPhone models due to launch later this year. A senior official at a major Apple contract assembler said that the production ramp-up of 5G iPhone components has been delayed, though it is still possible that Apple could launch the phone during its usual September timeframe. This contractor already expects a 10% drop in Apple orders for the first quarter of 2020.

“No one is talking about manpower or material shortage (in China) anymore. Now everyone is looking at whether demand from U.S. and Europe could keep up,” said the person, who has direct knowledge of the matter. “The focus now is the demand from consumers in the U.S. and Europe.”

Another key Apple display supplier expects to ship 17% fewer units to the company this year — from 70 million display units to 58 million units. This supplier is also looking to cut down on its workforce at its Apple-factory in Vietnam where it assembles the display for Apple products.

Some suppliers, however, are not expecting a decline in orders from Apple. A sensor maker for iPhone expects to have a better Q1 than last year and says that it will continue to produce components as per the forecast given by Apple about a month ago.

Our Take

All major countries across the globe have come to a screeching halt due to the COVID-19 outbreak. Apple has also shut down its retail stores across the globe except for China for the same reason. This is definitely going to have an impact on iPhone and smartphone sales in general as consumers will look to curtail their expenses due to uncertain economic conditions.

[Via Reuters]