Apple (AAPL - Free Report) is most likely to bring 5G to iPhones in 2020, per a latest report by analyst Ming-Cho Kuo, cited by TechCrunch and MacRumors. The latest report from this acclaimed analyst further supports rumors of Apple’s iPhone line-up missing out on 5G this year.
The analyst believes that two models — 5.4 inch (smaller than the current 5.8-inch iPhone XS) and 6.7-inch (larger than the current 6.5-inch iPhone XS Max) — will get 5G support beginning 2020. The mid-range 6.1-inch will continue to operate on LTE. However, all three models will have an OLED display.
Moreover, beginning 2021, all iPhone models will support 5G. Qualcomm (QCOM - Free Report) and Broadcom (AVGO - Free Report) are expected to supply 5G modems and RF power amplifiers, respectively.
Apple is expected to have its own modem by 2022 or 2023 that will reduce its dependence on Qualcomm.
Will 5G Delay Hurt Apple?
Apple will undoubtedly be late in bringing 5G to its flagship iPhone compared with other prominent smartphone manufacturers like Samsung, LG, Huawei and Motorola.
However, limited coverage by wireless carriers is expected to dampen user adoption rate in 2019. This doesn’t bode well for these smartphone makers.
In the United States, nationwide availability of 5G from all major carriers is not expected to happen before 2020. The global picture is also not much different with 5G rollouts in countries like Canada, Mexico, Brazil, Japan, China, India and others.
Currently, Verizon (VZ - Free Report) , AT&T (T - Free Report) and Sprint (S - Free Report) are three carriers that have made their mobile 5G services available in the United States.
Notably, Moto Z3 and Moto Z4 (paired with 5G moto mod) from Motorola, and Samsung’s latest Galaxy S10 5G currently support Verizon’s mobile 5G network, which is available in parts of Chicago and Minneapolis.
Verizon plans to launch its 5G Ultra-Wideband Network in more than 30 U.S. cities in 2019.
AT&T expects to have a nationwide reach by 2020. As of Apr 9, 2019, the company’s service was available in 19 U.S. cities. Samsung’s Galaxy S10 5G supports AT&T’s 5G network.
Moreover, Sprint’s 5G network is available in four cities, including Dallas, Houston, Kansas City and Atlanta. LG’s V50 ThinQ runs on this network.
Hence, the delay is not expected to have a significant negative impact on Apple. In fact, analyst Ming-Cho Kuo expects 5G-supported iPhones to comprise 60% of iPhone shipments in 2020.
Apple’s iPhone Shipment Likely to Decline
However, iPhone shipment in fiscal 2019 and 2020 (Apple’s fiscal year ends in September) will be hurt by lower number of upgrades. We expect users to postpone buying new iPhones in anticipation of the 5G-supported device.
Moreover, sluggish demand in Greater China, stiff competition from Chinese handset makers and the ongoing U.S.-China trade tussle are expected to negatively impact iPhone shipment in the near term.
Currently, Apple has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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