Apple (AAPL - Free Report) is expected to wait until 2020 to unveil an iPhone with 5G connectivity, per Bloomberg.
The Cupertino-based company, which initially planned to launch a 5G supported iPhone by 2019, is likely to delay the launch due to unavailability of Intel’s (INTC - Free Report) 5G-enabled chips. Notably, after a legal dispute over royalty payments with Qualcomm (QCOM - Free Report) , Apple chose Intel’s 5G chips for its iPhones.
Following the news, shares of Apple decreased 4.4% to close at $176.69 on Dec 4. Year to date, the company has gained 4.1% compared with the industry’s rally of 9.6%.
We believe the delay may not bode well for Apple as other major phone providers like Samsung, Oppo and Huawei Technologies are gearing up to launch their 5G phones in 2019. Moreover, in terms of shipment (second-quarter 2018), Apple has lost its position to Huawei, which became the second largest smartphone seller after Samsung, per Gartner.
Additionally, a recent Wall Street Journal report stated that Apple lowered production orders for recently released models in September and October this year. Lower-than-expected demand for iPhones coupled with Apple’s decision to introduce more models is likely the reason behind the production cuts.
However, Apple is shifting toward a high margin business model by including more services to its portfolio.
Apple Inc. Revenue (TTM)