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COVID-19 may not delay Apple's 5G iPhone, but demand risks loom

Analysts do not expect the COVID-19 outbreak to significantly delay Apple Inc.'s 5G iPhone launch this fall, but consumer demand remains a concern.

Reports have indicated that Apple might push back the launch of its highly anticipated 5G iPhone, originally set to be released at the company's annual hardware event in September, as the coronavirus roils the global smartphone supply chain. Though many analysts actually expect any delay to be minimal, they said current economic uncertainties and a general lack of knowledge about 5G's capabilities could hurt sales.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

In a worst-case scenario, Wedbush Securities analyst Daniel Ives said Apple could delay the launch of its 5G-enabled iPhone until the middle of its 2021 fiscal year, meaning the company would miss out on the all-important holiday period.

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Apple's latest iteration of the iPhone, the iPhone 11 Pro and iPhone 11 Pro Max, retail for $999 and $1,099, respectively.
Source: Apple

But it is more likely that the 5G iPhone launch is instead pushed to the holiday quarter, Ives said. The analyst estimates that about 350 million of Apple's global iPhone users are currently in an upgrade window.

For his part, Gene Munster, a managing partner at venture capital firm Loup Ventures, still expects Apple to launch its 5G iPhone this fall, noting that it usually takes the company three to four years to make an iPhone from concept to launch.

"Having the luxury to plan beyond the unexpected is one reason why we remain confident in Apple's ability to maintain and extend its tech leadership in the years ahead," Munster wrote in a report.

Many industry observers were expecting 5G technology to boost phone upgrades this year and revive a smartphone market that has matured as more consumers hold onto their phones longer. 5G is set to offer download speeds many times faster than the current 4G LTE wireless networks.

But Jessica Montgomery, a research data analyst at S&P Global Market Intelligence's 451 Research unit, said a general lack of knowledge about 5G and its capabilities could prove an obstacle. According to a recent 451 Research survey, about half of the respondents had only heard of the term 5G and 7% had never heard of it.

"5G still [does not have] a super high awareness in the general population," Montgomery said in an interview. "People say, 'Oh, it's a 5G phone, I want that.' But they don't really know all the capabilities yet."

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Apple's iPhone sales revenue for the fiscal first quarter totaled $55.96 billion, up from $51.98 billion in the year-ago period, driven by strong demand for the company's iPhone 11 and iPhone 11 Pro models that debuted at its annual fall hardware event in 2019. However, Apple has already warned investors that it will likely miss its March-quarter revenue guidance due to coronavirus-related impacts on production and demand in China.

Even if Apple and other top handset-makers are able to ramp up production in the second half of this year as impacts from COVID-19 subside, it remains unclear whether demand will follow, said Ben Bajarin, principal analyst at Creative Strategies, a Silicon Valley-based industry analysis and research firm.

"A lot of the investor notes I've read said ... we anticipate the second half of the year to pick up," Bajarin said in an interview. "I'm just not sure you can make that a safe assumption if, one, we're still dealing with this by the end of summer and then two, [if the coronavirus has had lasting] impact on any country's economy from a recession standpoint."

Brian Partridge, research vice president at 451 Research, said consumers could be more cautious about spending money on smartphones specifically since they are becoming increasingly more expensive. Apple's iPhone 11 Pro and iPhone 11 Pro Max models, for instance, are among the company's most expensive iPhones to date, starting at $999 and $1,099, respectively.

"We're all going to be watching things a little more closely," Partridge said.

Apple did not respond to a request for comment about how the coronavirus could impact its 5G iPhone plans.