Apple has been thinking about and preparing for the effects of the novel coronavirus on its business for months now. The company has done what it could to keep manufacturing on track, but one thing it can’t control is Chinese consumers’ appetite for new iPhones when they’re either sick from or worried about COVID-19.
Wall Street expected iPhone sales to take a hit in China, but it didn’t expect a 61% drop in February. According to numbers released by the Chinese government, Apple sold just 494,000 iPhones in the country during February. That’s a 79% drop from the month of January this year.
China was in a state of virtual lockdown during the last two weeks of February as the coronavirus continued to find new victims. The overall smartphone market in China was down 55% in February, according to the Chinese government.
Apple said in mid-February that it would not hit the revenue guidance it gave when it announced its holiday-quarter earnings in January. At the time, Apple forecast $63 billion to $67 billion in revenue for the March-ending quarter.
But UBS equities analyst Timothy Arcuri said in an investor brief today that he now expects iPhone sales for the first three months of 2020 to be off by 2 million devices from the same quarter last year.
The effects of the coronavirus on Apple’s suppliers and assemblers in Asia could even affect Apple’s product launches set for this year.
“Supply challenges have given way to broad global demand concerns; if the situation persists deep into the June, it is possible that Apple would have to delay the 5G iPhone launch this Fall, though our base case remains that the launch is on-time . . .” Arcuri writes.