Ming Chi-Kuo Coronavirus iPhone Supply Analysis Sees Downward Trend

A man wearing a mask walk at the Shanghai Stock Exchange building at the Pudong financial district in Shanghai — (Photo : REUTERS/Aly Song) A men wearing a mask walk at the Shanghai Stock Exchange building at the Pudong financial district in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 3, 2020.

TF Securities analyst Ming Chi-Kuo believes that the ongoing coronavirus scare is partly to blame for an anticipated 10% drop in iPhone supply this 2020. In the Ming Chi-Kuo Coronavirus iPhone supply analysis, Ming predicted that there might be only between 36 to 40 million units shipped for a 10% decrease for the first quarter of 2020 as concerns about the Wuhan coronavirus spread to become more prevalent. This is comparable to the 38 million units shipped for the same quarter in 2019, Ming said. Ming admitted though that this prediction is not 100% certain due to the uncertainties about the virus scare and the lack of consumer confidence.

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On the upside, the Ming Chi-Kuo Coronavirus iPhone analysis noted that earnings and the Apple stock price might remain the same. However, one major supplier of Apple products located in Wuhan, China, namely Foxconn, initiated higher health monitoring at the factory due to the Wuhan coronavirus concerns. Apple itself has chosen to shut down temporarily its offices within China as well as its retail stores there up to Feb. 9. The company is observing the situation in China to determine what it will do next.

Apple Contends with Five Big Risks Due to Coronavirus

Earlier reports said that analyst Ming believes that Apple has five risks to contend with regarding the spread of the coronavirus, even before March 2020 has arrived. These risks are:

Fears about the virus will probably hammer consumer confidence.
There may be a labor shortage for assembly of Apple products in China, leading to lower shipments of parts and finished products in the supply chain during the first two quarters of 2020. (Among the Apple products affected by this trend are the Mac series, iPhone SE 2, and iPad Pro.)
Ming speculates that Apple might even "delay new material adoptions or lower test requirements for components" to cut the qualification processes plus meet its own deadlines for launching new products in the last two quarters of 2020. He believes this would probably affect the "ASP" of materials or components. (Ming did not elaborate on what "ASP" refers to.)
The development phase of new products by Apple lasts for the first two quarters of 2020, meaning the launch of such products for the first half of 2021 will be affected because Apple employees who are not based in China will not be traveling yet to China due to the Wuhan coronavirus scare. There will be no one in China to make the big decisions as to what products to develop or launch.
The Face ID feature of Apple smartphones may need to be amended with a biometric solution such as a fingerprint scanner because Face ID cannot be used on a face with a protective mask on it.

The Ming Chi-Kuo Coronavirus iPhone analysis was made after the Wuhan coronavirus became the latest in a series of viruses that have hit China in the past. Other strong coronaviruses that became household names are SARS and MERS. The Wuhan coronavirus is believed to have caused the deaths of over 100 people as of January 29, 2020.

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