IPhone supply chain sends bullish signal on 5G after lukewarm start
Apple iPhone suppliers are working to meet growing demand for Apple Inc.’s 5G handsets after savvy consumers leap forward in the first major wireless technology upgrade in one decade.
Strong demand for the devices helped iPhone assembler Hon Hai Precision Industry Co. to beat quarterly revenue guidance. Anglo-German chipmaker Dialog Semiconductor Plc raised its revenue forecast due to stronger than expected demand for 5G phones and tablets.
The numbers suggest that the world could finally make the switch to 5G with its much faster download speeds and more reliable connections. After spending billions of dollars on new infrastructure, carriers struggled to sell expensive phones to consumers during an economic crisis.
They were hoping that Apple’s late arrival in 5G gaming would increase demand, but the situation is uncertain in the first few months. Apple shares fell in October after quarterly iPhone sales missed Wall Street estimates and China revenues fell, although chief executive Tim Cook said the new iPhone 12 lineup 5G compatible had been well received.
This update confirms the continued strong performance of the Apple hardware line, always supported by the need to work from home and learn from home, said Bryan Garnier analyst Fr d ric Yoboue. On top of that, it shows that the demand for new iPhones is very dynamic.
Asian countries, including South Korea and China, have advanced the fastest in rolling out full 5G services. US telephone companies are piling on technology to maintain profits over the next decade and rush to offer the largest and most reliable network.
In a nationwide 5G airwaves auction on Monday, bids from operators and pay-TV providers exceeded $76.5 billion, crushing analysts’ estimates by $47 billion.
According to data compiled by Gartner, demand for 5G equipment was not clear after several years of slow phone sales that peaked at around 1.5 billion units in 2019. This is in part because the phones high-end have become more expensive: Google, Samsung, and Apple have all rolled out multiple devices costing over $1,000.
Europe’s less profitable phone industry has avoided a sharp drop in 5G, fearing it would roll out expensive services that consumers would not be willing to pay for. This leaves a pioneering wireless mobile phone region lagging behind the world when it comes to the latest technology, with many countries still lacking full 4G services. In much of the region, 5G signals are disappearing beyond the boundaries of major cities.
If European consumers joined in the rush for 5G phones, it would give a short-term boost to the profits of carriers who make part of their income from the sale of handsets, and encourage them to spend more to fill in the gaps. national 5G coverage.
Headwinds of 5G
Apple’s 5G push has been complicated by a shortage of vital chips that manage the power consumption of iPhones and other devices.
There is also a turbulent political context. Governments around the world – led by the United States – have banned the Chinese Huawei Technologies Co. and ZTE Corp. to provide 5G network equipment, forcing local telecommunications companies to adopt more expensive alternatives.
Conspiracy theorists have also promoted baseless and widely condemned theories linking 5G to the spread of the coronavirus.
That has done little to shake long-term optimism over a technology that enables near-instant video downloads and heralds a host of industrial applications, from self-driving cars to remote surgery and connected factories. 5G is expected to generate $1.15 trillion in revenue by 2025, according to forecasts from the GSMA, an industry body.
We expect strong consumer demand to continue to penetrate deeper into the supply chain, said Andrew Gardiner, analyst at Barclays.
–By Giles Turner and Thomas Pfeiffer.
