Impact of 'New Coronavirus'... Concerns Over Disruptions in Smartphone and Accessory Production

Production Schedule Delayed Due to Extended Lunar New Year Holiday
Huawei Postpones Developer Event
Apple iPhone SE and Others Face Production Disruptions
Apple's Late 2024 and Early 2025 Schedules Also Affected

Chinese people standing in line to buy masks (Source=Yonhap News)

[Asia Economy Reporter Han Jinju] As the novel coronavirus infection (Wuhan pneumonia) spreads, the smartphone industry is also being affected directly and indirectly. Apple, which is about to launch new products, is particularly concerned that its high dependence on production in China may disrupt its release schedule.

According to IT specialized media SamMobile on the 30th (local time), due to the extension of the Chinese Lunar New Year holiday, third-party smartphone case manufacturers located in Wuhan, China, have been unable to supply cases in time for the Galaxy S20 unveiling schedule. Some smartphone accessory manufacturers reportedly sent emails to distributors stating that product launches would be difficult until February 11.

Meanwhile, Huawei postponed its developer event originally scheduled to be held in Shenzhen for two days starting February 11 to March 27. As the number of deaths and confirmed cases from the novel coronavirus rapidly increases in China, it is difficult to hold events where many people gather in one place.

Apple, which produces most of its iPhones in China, is particularly under pressure. Apple CEO Tim Cook stated during the earnings conference call on the 28th (local time) that some parts suppliers are located in Wuhan and that production activities are being affected by the novel coronavirus. CEO Tim Cook said, "Operations will be suspended until the 10th of next month," and added, "We are looking for alternative suppliers to compensate for the expected production loss."

iPhone SE9 (iPhone 9) Rendering Image

Ming-Chi Kuo, an Apple specialist analyst at TF International, pointed out in an investor note that the production of Apple iPhone SE2, iPad Pro, Mac, and other products could be disrupted. Due to the Chinese government's measures extending the Lunar New Year holiday, factories cannot operate until mid-February. Apple had been preparing to start production of mid-to-low-end iPhones next month, but it has become difficult to release them as planned. Analyst Ming-Chi Kuo warned, "If product launches are delayed due to the novel coronavirus, it will also damage the trust of Chinese and global consumers in Apple products."

In the short term, it is pointed out that the development schedule for new products in the second half of this year and as far as the first half of 2021 could also be affected. Kuo explained, "The worst-case scenario for Apple is a delay in the launch and production schedule of new products scheduled for release in the second half of 2020," adding, "If the spread of the novel coronavirus does not improve, the testing standards in the process of selecting new materials or parts necessary for new product launches may be lowered, which could negatively impact the average selling price (ASP) of smartphones."

He further added, "If the novel coronavirus epidemic situation continues and affects the business trip plans of Apple's non-Chinese employees, it could also impact Apple's new product development schedule in the first half of next year."

Foxconn, Apple's contract manufacturer, has production plants in Wuhan, Suzhou, and Zhengzhou areas. Foxconn decided to suspend factory operations until the 10th of next month due to the impact of the novel coronavirus. CEO Terry Gou also urged employees not to visit mainland China during the Lunar New Year period. Recently, Foxconn stated, "We have measures to handle all global orders."

This content was produced with the assistance of AI translation services.