Evidence is mounting that Apple’s long anticipated 5G smartphone might be delayed.
It all started when Broadcom released guidance for third quarter results, on June 4. The management team explained that the expected softness in financial performance would be due to a product cycle holdup caused by a “large North American OEM phone maker”. Any guesses who this phone maker might be?
Even though iPhone 12 production seems to be on track, issues with the design needed to support ultra-fast 5G may delay the launch of the higher-end trims. As it turns out, the much awaited 5G supercycle that led to a bullish wave on Wall Street may be at risk.
Not the first time that iPhones are delayed
The current situation takes me to 2017. Back then, Apple’s 10th anniversary iPhone had been widely anticipated. However, most likely due to issues with the device’s facial recognition technology and “bezel-less” design, the iPhone X came out six weeks after the lower end iPhone 8 and 8 Plus.
One of the problems with delayed launches in the third quarter of the year is missed sales in the holiday season. The iPhone X was finally launched a mere three weeks ahead of Black Friday. When it did, demand exceeded supply – generally a good problem to have, but not in the middle of the shopping period.
Despite all the bumps in the road, the challenging fourth quarter of 2017 marked an important milestone: Apple surpassed Samsung to become the number one smartphone vendor. Even though shipments in general were down that year, the Cupertino company managed to steal about one percentage point of market share away from its competitors in the holiday quarter.
The delayed iPhone X ended up not being much of a headwind to sales, and the stock price kept climbing as 2018 rolled in.
Remember to think long term
Uncertainty around the success of this year’s 5G cycle could damper investor sentiment. And if the production problems are significant, Apple could lose ground to competitors. But as I argued recently, the 5G opportunity extends beyond the short term.
I think that the new technology will spark an “application revolution” like the one that took place around 2011 with 4G – although not until next year and beyond. Apple can capitalize on it through new and revamped services. Augmented reality, health and industrial applications, smart devices and IoT are all on the table.
If an iPhone launch mishap knocks the share price off its balance later this year, I believe it will open an opportunity for long-term investors to catch shares a bit cheaper.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. Thanks for supporting The Apple Maven)