Weakened demand in China could be so bad that Apple even decides against making iPhone 12 models for this market …
Worst case: Supply chain towards full capacity in June; Key 5G iPhone product launches for the Fall pushes out past Holiday season into mid FY21 and normalizing US/Europe consumer demand trajectory not until December while demand across China rebounds, but demand destruction (no 5G phone) is clear throughout this key region.
Summary: Supply chain full capacity until by June timeframe, Key 5G iPhone launch gets delayed past holiday season, and China demand destruction is worse than expected with no 5G phone in the market. Lower cost iPhone hits in June/July.
In other words, Apple would only continue selling older models in China, and then hope to make new sales from the delayed iPhone 9 sometime in the summer.
The worst-case scenario for AAPL is not, says the firm, a likely one. Its base case – the one it considers most realistic – is that the iPhone 12 launch is delayed until the holiday quarter beginning in October; that demand in the US and Europe is relatively normal; and that although Chinese demand is hit harder, the iPhone 12 still sells there. In this case, it expects the iPhone 9 to launch in June.
The idea of an on-time launch and normal demand is, however, now considered optimistic – and even then, it believes Chinese demand will badly hit, and that the iPhone 9 will be pushed back into May.
There have been conflicting reports on whether the iPhone 12 launch will be delayed. One report said printed circuit board production has been delayed; another said not; a further one said there have been delays, but not definitive ones; and yet another said that Foxconn production is so far on-track but there may yet be trouble ahead.
The smart money is that no final decision has yet been made. Mass-production doesn’t typically ramp-up until the summer, so my expectation is that Apple is aiming to keep everything on-track for now, before making a decision based both on production feasibility and estimated demand.
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