According to Reuters, demand for Apple's products has fallen by 18% this year. Experts fear a deeper decline in the near future.
China has reopened its economy after the coronavirus pandemic has passed its peak. So, Apple's iPhone factories located in China have started working again. However, the tech giant is now facing a serious problem. Analysts are expecting a sharp drop in demand for its devices. In the fourth quarter of 2020, the number of new orders decreased by 18%. Market experts fear that this is just the beginning.
Due to the coronavirus outbreak earlier this year, most of Apple's factories, including those in China, were shut down. As a result, the delivery schedule of smartphones, primarily Apple's iPhone, was shifted. Two months later, the Chinese authorities managed to contain the spread of the virus and most factories resumed their operation. However, Apple saw a widespread reduction in demand for electronics. According to analysts, if the company does not find a way to boost demand, Apple's revenues may contract considerably. "Things are changing on a day by day basis due to supply chain disruptions, so it is difficult to craft any meaningful comment at the moment about both supply and demand," Apple representative said.
What is more, the production ramp-up of new phones working with next-generation 5G networks may also be postponed. Earlier, the company hinted that it was unable to launch the new 5G iPhone model in September 2020. The company's officials discussed the possibility of rescheduling the traditional September presentation.
One of Apple's contractors pointed out that the company had ordered 70 million screens for the iPhone for the current year. However, this number is likely to be reduced to 58 million, which is 17% lower than the previous forecast.
US consumers are hesitant to answer whether they will be able to spend their pre-crisis savings on electronics. If the epidemiological situation across the country worsens, about a third of respondents surveyed by Civic Analytics said that they would not spend their money on gadgets as they used to spend before the pandemic. At the same time, more than 50% of respondents do not intend to cut spending on smartphones if the government halts the coronavirus spread.
Taipei-based technology analyst Arthur Liao of Fubon Research calculated that in the first quarter of 2020, the volume of iPhone shipments amounted to 35 million, which was 17% lower than last year. Notably, total iPhone shipment forecasts for 2020 were lowered to 198 million, down from an earlier forecast of 204 million. At the same time, since the beginning of 2020, Apple shares have shed more than 15%.
