Thursday , April 2 2020

Smartphone supplies may soon run out


As Chinese factories hit by the coronavirus look to restart production, the pain is only beginning for carriers that rely on steady shipments of Asian smartphones.
AT&T Inc is bracing for handset shortages across the US. A carrier in the UK and one in France are already dealing with supply disruption and could run out of some popular models, people familiar with the matter said.
British network operators may even resort to using stockpiles of phones they’d built up in case of a Brexit-related supply crunch, said one of the people, a company executive who asked not to be identified as the information is private.
The supply chain chaos may last only a few weeks, but it’s already wiping out the smartphone industry’s hopes for sales growth this year.
Worldwide device sales are set to fall 4.3% in 2020, with European sales tumbling 7.4%, according to industry consultancy Canalys. It was forecasting global growth of 3.6% before the virus brought much of Chinese industry to a juddering halt.
“There’s a huge supply-side shortage for smartphones that we are already starting to see trickle through to some markets around the world,” said Ben Stanton, head of devices research for Europe, Middle East and Africa at Canalys.
He said global handset production was 35% of normal levels in February, will return to 85% this month, and could get back to normal by April.
The output slump means it’ll take time to fix delivery backlogs for brands like Apple Inc, Samsung Electronics Co Ltd and Huawei Technologies Co.
The Canalys estimates are based on confidential feedback from manufacturers, distributors, carriers and retailers.

‘Complex System’
About 5 million mobile phones are sold every day. Many of those units take just a few weeks to go from the assembly plant to the consumer in tightly-choreographed arrangements planned months in advance.
“The supply chain is a complex system, only as strong as its weakest link, and at present a lot of elements are out of sync,”
said Marina Koytcheva, vice president of forecasting at CCS Insight.
CCS cut its forecast for sales of mobile phones outside China in the first six months of the year by 10%. Koytcheva said the industry may face an even bigger problem than supply glitches if virus outbreaks hit phone demand and economic growth across the world.
“Judging by the weak demand for smart devices in China in January and February, this is a major concern,” she said.
Carriers are hoping Apple’s first 5G iPhone will boost their revenue by kicking off a new sales cycle and getting customers to upgrade their plans. Doubts about the launch timing are now creeping in, and Stanton said 5G marketing campaigns may need to be delayed.
Some Apple products, such as the iPad Pro tablet, have been seeing limited availability at stores in major cities in the US, Australia and Europe, according to a review of the company’s website.
The virus has led to a “modest tightening” of iPhone supply over the past two weeks, Loup Ventures, which tracks lead times for Apple products, said on its website. Apple has said the supply shortages will affect its worldwide revenues.
At a Morgan Stanley investor conference, AT&T Chief Operating Officer John Stankey said the US carrier faces potential phone shortages.
Its rival, Verizon Communications Inc, has seen no material impact from the virus response, but it’s still early, Chief Financial Officer Matt Ellis said at the same event. If disruption continues, “I think we’ll see a more material impact on our equipment revenue line,” he added.
Carriers can’t even raise prices to make up for lower unit sales as they’re locked into agreements with manufacturers to sell the devices at set values, said Stanton at Canalys.
“March is going to be the big month of challenge, and it may well extend into April as well,” he said.
“There’s not a lot they can do at this stage.”

Apple warns on shortage of replacement iPhones

Apple Inc warned retail employees about shortages of replacement iPhones, another sign the coronavirus outbreak is straining the company’s supply chain.
The company recently told technical support staff at stores that replacement iPhones for heavily damaged devices will be in short supply for as long as two to four weeks, according to Apple Store employees. The workers, known as Geniuses, were advised that they can offer to mail replacement iPhones to customers and provide loaner devices to ease delays.
Some Apple stores have also noticed a shortage of individual parts, according to the employees, who asked not to
be identified discussing private information.
When a user brings in a damaged iPhone to an Apple store, the company can replaces individual parts such as the screen or camera. If the device is beyond repair, the company often provides a replacement phone rather than a brand new model.
The dearth of iPhone repair parts is one of the first visible effects from the virus on Apple’s operations.
The company has begun to see shortages for the iPad Pro, Bloomberg News reported recently, while the supply of the iPhone 11 has begun to slightly tighten internationally. .

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