Apple supply chain analyst Ming-Chi-Kuo says that the Coronavirus is a threat to Apple’s business, since the majority of its supply chain is based in China (via AppleInsider).
Coronavirus
First, he expects smartphone shipments to drop in China throughout this year and possibly into the future. He writes:
…shipments of Apple products will likely face downside risk because the consumer confidence of Chinese and global markets could be negatively affected by the coronavirus outbreak…
Next, because of this labor shortage, Kuo expects low shipments for Apple’s components and devices. The iPad Pro, iPhone SE 2, and Macs are at risk, as well as other rumored products coming out this year.
If there are no significant improvements regarding the coronavirus epidemic in the foreseeable future, we predict that Apple may delay new material adoptions or lower test requirements for components to shorten qualification processes and launch new products in 2H20 on schedule, and the lower spec will likely hurt the ASP of materials or components.
Further Reading
[Apple Stops Almost All Travel to China Amid Coronavirus Outbreak]
Andrew:
Let me see if I understand this argument. 2019-nCoV will asymmetrically affect Apple sales because, given that Apple recycle much of their material, this allows for the sale of new products with residual human residue from those recycled components, in which Coronaviridae can survive, thus converting these devices into pre-infected fomites that, if purchased and used, will infect users worldwide and could result in a global pandemic, potentially ending human life on earth, as we know it. Apple users, typically having both greater disposable income and higher median education than say, Dell or Android users, will have a broad understanding of germ theory, appreciate the pandemic potential of Apple products, and curtail their purchasing practices, while ignorance will reign amongst purchasers of products made by OEMs, which in any case are made from non-recycled crappola, and these products will continue to sell at pace, and will thus ring the Apple death knell once and for all.
Got it.
Jest aside, most analysts, as reported by Bloomberg and the WSJ, suggest a negative impact on the Chinese economy writ large, which will have a negative effect on economies worldwide. Regarding the coronavirus infection, the most recent data, which have come since the publication of the first in depth study of the first 41 documented cases from Wuhan published in the Lancet on 24 January, suggest that, out of about 4400 cases, the mortality rate is closer to less than 2.5%, putting this well below both SARS at 10% and MERS-CoV at about 30%+. Indeed, one of the concerns about this virus is that many infected people are entirely sub-clinical exhibiting no signs of illness whatsoever, thus spreading the virus more widespread than currently known. This, if true, is actually good news, because it may indicate that this virus, not unlike Rhinovirus (ie the common cold), is not that lethal. In short, this is a climate of uncertainty.
Given this uncertainty, it is premature to single out the impact of just one business from just one sector of the global economy.