‘15% reduction in handset shipments’
While announcing flat revenues, the company has managed to maintain its business during the pandemic, but Mollenkopf warned fourth quarter guidance might be impacted by a delayed product launch.
“Our guidance for the fourth quarter of fiscal 2020 includes an impact of greater than ($0.25) to EPS attributable to a planning assumption of an approximate 15% year-over-year reduction in handset shipments due to COVID-19, including a partial impact from the delay of a global 5G flagship phone launch,” he said in a press release.
Now we don’t know for certain it’s Apple that he’s talking about, but it remains a major Qualcomm customer and is expected to install Qualcomm’s 5G radios inside the iPhone 12, so if a customer has a delayed product launch and that deal is enough to reduce earnings by 15% then it has to be a major hardware manufacturer. And there just aren’t that many around manufacturing product at that kind of scale.
“It’s very likely to be Apple,” Moor Insights & Strategy analyst, Anshel Sag said.
It may only be a short delay
What’s important to note is that Qualcomm’s comment doesn’t favor the idea of a lengthy delay to the product’s introduction, just a ‘partial impact’. This suggests that the device will still appear in 2020, but that its usually predictable on sale date may slip slightly.
That’s completely in line with recent market rumors, as discussed here and reprised below:
- Nikkei warned manufacturing may not begin until October earlier this year.
- Digitimes recently claimed Apple to be on schedule for a September launch but that the product may ship a little later than usual.
- Broadcom CEO Hock Tan also hinted as much in June.
- The Wall Street Journal and Bloomberg have published similar warnings.
What’s likely to happen?
The accumulating series of claims strongly suggest delay.
The most likely set of events is that Apple will introduce the device at an online event in September, but ship the device later than usual, or stagger the release of the new models.
If it does so it will understandably cite the impact of COVID-19 as the cause of the delay. It is thought the pandemic made product development and manufacturing design challenging as key staff were unable to travel.
Apple’s new devices are expected to include two cheaper 5.4-inch and 6.1-inch models and two higher-end devices with 6.1- and 6.7-inch displays, the latter with larger batteries and a much-improved camera, including 3x optical zoom.
But by far the most significant enhancement is expected to be the introduction of 5G…
That 5G thing
I’m on record for believing 5G won’t be that important to most consumers until 2022, by which time infrastructure roll out should be more universally available and new generations of high bandwidth mobile services should be available.
That’s also when you can reasonably expect that many PCs, Macs and tablets will include 5G chips, enabling serious improvements in mobile productivity.
5G deployment is taking place at different rates worldwide. In China it is already very advanced (and is probably one of a number of reasons Huawei eclipsed both Samsung and Apple in Chinese smartphone sales in the last quarter).
Meanwhile, it’s Qualcomm’s game.:
“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” said Mollenkopf.
The need to move to 5G has already driven Apple to purchase Intel’s modem business and reach a deal ending litigation with Qualcomm, but it is not expected to ship its own 5G modems until 2021 at the absolute earliest.
Copyright © 2020 IDG Communications, Inc.