The impact of the Coronavirus outbreak has started showing its results. One such is the mayhem in the consumer durables’ market. The market of any electronic item manufactured in China, be it Apple products or gaming consoles or LCD screens, is on the verge of crumble. The downside is likely a delay in planned launches of 2020 and meeting production targets.
Apple Inc.’s most valuable partner, Foxconn has already raised alarm. It has cautioned its investors about the extreme possibility of a “nightmare” scenario wherein the production unit might shut down due to an epidemic on factory premises. The production unit of Apple supplier, Foxconn is Zhengzhou. It is located a few hundred miles from the epicenter of the Coronavirus outbreak.
The unit houses the production of the popular iPhone 11, Airpods and the March 2020 low-cost iPhone, the iPhone 9/iPhone SE 2 launch. Apple had planned to launch a cheaper model, iPhone 9/iPhone SE in the first quarter of 2020. Also, it had plans to increase iPhone production but they were thwarted by the outbreak of a new coronavirus in China. Foxconn had to shut down temporarily amidst reports of government inspectors vetting its containment procedures.
It was estimated that manufacturing will restart from the third week of February a few weeks ahead of the announcement of the new iPhone model. But the uncertainty looming large on the resumption of schedule by supplier factories, the launch plans are likely to be pushed. There could be a notable lag in supplies with longer shipping and waiting time.
The extension of the closure of factories is considered to be a “shock to the system” and will “disrupt the supply chain further.” Concerns over the impact of Coronavirus resulting in delays of 2020 first quarter launches have been also raised by Apple analyst Ming-Chi Kuo also.
It is estimated that Apple’s sales will be hit at the rate of one million iPhones for every week’s closure of Foxconn. As per reports in the Nikkei Asian Review, Apple’s requests to suppliers to produce 80M iPhones over the first half of 2020 could be delayed.
Apart from Apple devices, news about a possible delay of both the PlayStation 5 and the Xbox Series X is on cards. In a report by Business Insider, Coronavirus outbreak will have an impact on the Holiday 2020 Launch timelines of PS5 and Xbox Series X since they’re being manufactured in China.
“If [company] shutdowns exceed a month or so, game schedules will be delayed. New consoles may likewise suffer supply issues from a prolonged disruption, ahead of their Fall 2020 planned launches.”