Original title: Apple's mobile phone sales in China fell in February, the release of new iPhone12 fear "cool"
The electronic product industry chain has been highly globalized, and it is not only Apple that is affected.
The original months of each year were a busy period for Apple engineers. They came to China to communicate with Foxconn and other manufacturing partners about the assembly process of the new iPhone models so that mass production can begin in the second quarter.
But the new coronavirus epidemic changed all that.
Currently Apple has restricted employees' travel. And while the production side is forced to stagnate, the demand side is also under pressure to "diving."
The latest data from professional research institutions shows that domestic shipments of Apple iPhones in February this year were less than 500,000, a 60% decline compared to the same period last year.
Li Shu, a global partner of Bain & Co. and the co-chairman of the Greater China TMT business, told First Financial reporter: "Compared to supply, the greater challenge comes from logistics. For example, if chip production is in Hubei, mobile phone assembly Guangdong, if the epidemic continues for a longer time, the impact on the transportation of equipment accessories will be further reflected, which may lead to disruption of the new product release rhythm and domestic and foreign customer supply plans. "
On March 11, local time, the White House convened a number of technology companies such as Apple, Google, Facebook, Amazon, and Microsoft to conduct video conferences to discuss measures to deal with the new crown epidemic. Currently, the number of confirmed diagnoses in the United States has exceeded 1,000, and many Silicon Valley technology companies require employees to work remotely from home.
At present, Apple and its supply chain companies are actively pushing business back to normal. Foxconn, Apple ’s largest assembly plant for the iPhone, has said it expects to resume production by the end of March, and 38 of Apple ’s 42 Apple Store retail stores in China have also resumed operations.
Apple still needs China
Apple's stock price has also been constantly experiencing roller coaster prices recently. On March 9, local time, the global market plummeted, Apple's stock price plummeted 8%, and its market value evaporated by US $ 100 billion (about 695 billion yuan), accounting for nearly one-third of the total US $ 320 billion of five US technology stock market evaporation. One. On March 10, Apple's stock price rebounded sharply by 7.2%, but on March 11, Apple's opening fell sharply by nearly 3%.
In the past month, Apple's stock price has fallen by more than 11%, from a high of $ 327 on January 29 to $ 285 on March 10.
According to the latest data released by the China Academy of Information and Communications Technology, the total domestic mobile phone shipments in February this year were 6.384 million units, a year-on-year decrease of 56% and a month-on-month decrease of 69.3%. Among them, Apple iPhone shipments were only 494,000, compared with 1.27 million shipments in the same period last year. Apple shipped 2 million iPhones in January this year, and February shipments fell more than 75% from the previous month.
Previous research institutions IDC and Canalys both predicted that due to the impact of the epidemic on the supply chain and demand side, China's smartphone shipments will decline by about 40% in the first quarter of this year.
The new crown virus epidemic is forming a new impact on Apple. This is another major challenge that Apple faces after the Sino-US trade friction and sluggish iPhone sales in China.
In February of this year, all Apple Stores in the Chinese mainland, Apple Store, were closed for at least two weeks. At present, with the exception of four stores that are not yet open, most Apple Stores have reopened.
Wall Street investment bank Wedbush analyst Dan Ives wrote in a report: "iPhone sales in February look like doomsday, but given the isolation China adopted in February As a result, all smartphone sales will face the same situation. "
According to Apple's previously announced financial results for the first quarter of fiscal 2020 (October 1 to December 31, 2019), Greater China is currently Apple's third largest market, with Chinese sales of $ 13.6 billion in the first fiscal quarter ( (Approximately 94.6 billion yuan); US and European sales were US $ 41.4 billion and US $ 23.3 billion, respectively.
Given that the supplier's production line is yet to be fully restored, Apple's second-quarter earnings report may show a greater impact of the epidemic on its sales.
Avis wrote in the report: "The impact of Apple's iPhone sales in this unprecedented epidemic will be reflected in the financial report as of March. We expect iPhone sales to fall by more than 50% year-on-year, mainly due to the supply chain. And the decline in demand in China. "
Ives also said that not only Apple's iPhone sales will decline, but iPad and Apple Mac production will also be affected. The production of Apple Watches and Apple Headphones, especially the AirPods Pro, which was released in the second half of last year, will be more severely impacted.
However, in the face of the epidemic, Apple CEO Cook's response was relatively calm. Speaking about China and the impact of the epidemic recently, he said, "Do we need to change something? My view is that if there is a change, it is just adjusting some small knobs, not some kind of large-scale and fundamental change."
Travel restrictions disrupt the release of new models
Last week, according to an interview with an anonymous Apple employee quoted by the media, Apple has warned its retail employees that iPhones used to change customers' phones will face a shortage of supply; in some Apple retail stores, There is also a shortage of individual parts needed for mobile phone repairs. Supply shortages are expected to continue for two to four weeks.
Apple had previously issued warnings to investors, saying that the resumption of the supply chain due to the epidemic was slower than expected and that it would not be able to achieve its sales target for the quarter. The iPhone repair parts shortage is one of the earliest signs of impact on Apple's business operations. Some netizens report that the iPad Pro has been in short supply, and the international supply of the iPhone 11 has started to become tight.
The greater uncertainty comes from Apple's original plan to release the iPhone 12 5G phone in the second half of this year. Consumers and competitors are paying close attention to the "open work" of this Apple 5G mobile phone.
Earlier, Apple's mobile phone design has been considered by many parties to lack innovation and highlights. The market had expected that the launch of the new iPhone 12 would greatly boost Apple's sales.
A recent Bank of America report quoted the supply chain as the slow resumption of factory operations due to the impact of Apple's China supply chain, which will delay the release of new iPhone models.
There was news from the upstream industry chain on March 9 that Apple's iPhone 12 mobile phone originally scheduled to be released in September may be postponed to October, and the low-cost iPhone SE2 mobile phone will also be delayed for several months.
The news also said that the iPhone SE2 mobile phone originally scheduled to be released in March this year has entered the final trial production stage in an assembly plant in China, but due to the epidemic situation causing delays in component delivery and other reasons, it may delay production to the second quarter of this year.
Apple has restricted employee travel, and Apple employees in California can choose to work remotely from home. According to an internal e-mail sent by Apple reporters on March 6, employees can choose to work from home. Apple is continuing to evaluate the development of the epidemic, saying that "the health and safety of employees is the most important."
Due to travel and quarantine restrictions, many employees in Apple's supply chain cannot return to work. Apple has also restricted employees from travelling to China, Italy and South Korea. The current deadline for travel restrictions has been extended by one month to the end of April, and these restrictions have also delayed the engineering verification testing of new iPhones at Apple's factories in China.
The supply chain manufacturer's news also revealed that the originally planned re-arrangement of the Apple 5G mobile phone iPhone 12 project verification process will be performed at the end of March, thereby ensuring that this device can begin mass production in June, but now the extension of travel restrictions may affect Mass production of the iPhone 12 series is postponed for another 1-2 months.
Foxconn, the assembler of Apple's iPhone, said last week that the company's output has reached 50% of seasonal demand. According to current plans, the company expects to reach full seasonal capacity by the end of March. But Foxconn warned: "There is still a lot of uncertainty and we cannot quantify its potential impact on the whole year."
Institutions cut 5G mobile phone shipments
It's not just Apple that has been affected by the outbreak. On March 10, Huawei cancelled the launch of the new P40 series 5G models in Paris.
A latest technology industry report released by Bain & Company shows that under the influence of the epidemic, the upstream supply chain of smartphones will face some pressure in the short term, and the medium-to-long term will have an impact on the mobile phone release rhythm and foundry layout. From the demand side, the decline in mobile phone sales in the short term will be inevitable, but the accumulated rigid replacement demand in the previous period is expected to gradually be released within 1 to 2 months after the epidemic. From the perspective of the channel, offline agents have been greatly affected by the epidemic, and the medium-to-long term will accelerate the transfer of sales channels to online.
In the latest report, Avis pointed out: "Although Apple's supply chain and China's demand have recently been affected, we believe that 5G mobile phones will drive a large-scale upgrade demand."
Ivis predicts that by fiscal 2021, Apple's 5G mobile phone shipments may reach 215 million to 220 million. In 2015, Apple set a record of selling 231 million mobile phones in the whole year.
In a report on the impact of the epidemic on the industry released by research organization Gartner on March 4, the global 5G smartphone shipments were reduced by 9.4% this year, 21 million less than the original estimate. Gartner also predicts that 5G mobile phone shipments in the second half of this year will account for 80% of annual shipments.
Gartner also lowered its overall revenue forecast for the global semiconductor industry this year by $ 10.8 billion, and cut its growth rate from 12.5% to 9.9%. The report believes that the overall revenue of the semiconductor industry will decline in the first half of this year, and a slow recovery in the second half.
Gartner analyst Sheng Linghai told First Financial and Economics reporter: "Semiconductor device production, 85% of production capacity is in markets outside China. Even if China's resumption of work is slow, the pressure on chip production is not great; but the electronics industry's The chain is very long, and there are many other components inside the phone, such as resistors and capacitors, PCB boards or antennas, glass and other accessories. If one or two are affected, the entire product may not be completed. "
From the perspective of the supply of terminal equipment, Sheng Linghai believes that the challenges of resumption and logistics will have a greater impact on global supply.
"75% of global electronic products are assembled in China. Without workers, assembly cannot be completed; logistics transportation is cut off, and goods cannot be shipped out. The impact in this area is relatively large." Sheng Linghai told the first Financial reporter.
Apple is also laying out the global industry chain.
Since 2017, Apple has been committed to developing manufacturing capabilities in India.
Nevertheless, it is still difficult for any place in the world to have China's supply chain capabilities. For example, Apple has been manufacturing Mac Pro in the United States, and recently used two Chinese contract manufacturers with factories in Vietnam to produce Apple AirPods Pro.
Even so, these productions are only small-scale and cannot be considered as a shift to manufacturing outside of China, because large-scale production outside China is still difficult, and it takes a long time to re-establish production lines.
"Apple has taken advantage of China's vast manufacturing capabilities and achieved amazing success with the support of a large number of workers and skilled and experienced technicians. There is no doubt that this cannot happen in the United States." Daniel, a senior commentator in the technology industry · Daniel Dilger said in a media post.
The epidemic has also raised concerns about whether the electronics supply chain will move out of China. In this regard, Sheng Linghai told the First Financial reporter that the industrial chain of electronic products has been highly globalized and the current global situation is also worthy of attention.
"The globalization and decentralization of the electronics industry chain is an inevitable trend. Overseas companies need to be decentralized, and Chinese companies need to accelerate the globalization of the entire supply chain," Sheng Linghai told reporters in the First Financial Reporter.
Author: Tong Lan