The economic repercussions of the coronavirus outbreak that originated in China are slowly being felt not only in China but by companies with interests in the region. Last week, analysts downplayed speculations that the outbreak could disrupt Apple's supply chain. Interestingly, TFI Securities Analyst and accurate Apple tipster Ming-Chi Kuo is now singing a different tune about Apple's iPhone production given the recent developments.
Coronavirus Latest Update
The coronavirus death toll in China has exceeded that of SARS. Earlier today, China's health authorities said that more than 360 lives had been claimed by the lethal disease. As of Sunday evening, the total count of those infected rose to almost 20 percent over the past day, which now accounts to 17,205. The first death outside China was confirmed in the Philippines, which officials said was a 44 years old Chinese man from Wuhan.
Smartphone Production
Ming-Chi Kuo's prediction on the production of the iPhone was a little bit optimistic, but now, the TFI Securities analyst is beginning to see potential disruption on the smartphone industry due to coronavirus outbreak. Based on his latest note to investors courtesy of Apple Insider, the analyst is now seeing smartphone shipments lower than anticipated.
Kuo conducted a survey, which reveals that the shipments of the Chinese market alone plummeted between 50 and 60 percent year over year since the Chinese New Year. As a result, it left a high channel inventory. Kuo adds in his report that the shipments would drop by 15 percent YoY in 2020, which is between 36- and 380 million units.
iPhone Production
The Taiwan-based analyst admitted that based on the survey they conducted, the supply of iPhone is affected by the recent coronavirus outbreak. Because of this, the analyst says that he is cutting the iPhone shipment forecast by 10 percent, which is equivalent to 36 to 40 million units in the first quarter of the year. However, Kuo states that for the second quarter of the year, he could not yet give his predictions because shipments could be affected by consumer confidence and the uncertainties of coronavirus.
Apple Closing Stores
Recently, Apple announced that it is closing 42 stores in China because of the coronavirus epidemic. It temporarily shut down service centers, corporate offices, and retail stores in the region. Last Monday, the Shanghai government told all businesses to shut down and resume operations on Feb.9 to fortify its control and prevention of the spread of coronavirus in the country.
Tesla earlier suspended the operation of its Gigafactory in China. Other companies with interests in the country also shut down their operations and advised their employees to restrict unnecessary travel to the region.
