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Will Apple (AAPL) Launch Entry-Level Budget iPhone Soon?

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Apple (AAPL - Free Report) is reportedly ready to launch an entry-level iPhone model very soon, per a latest 9TO5 Mac article. The website believes “Apple could reveal and begin taking orders for the new iPhone as soon as tomorrow.”

Notably, TF International Securities analyst Ming-Chi Kuo, in a February research report, cited by MacRumors, stated that this long-rumored budget iPhone is on track to be unveiled in the first half of 2020.

Apple usually updates its iPhone portfolio in September, annually. So any announcement in this regard would spring a major surprise for users. Notably, demand for the company’s flagship iPhone device suffered significantly due to the coronavirus outbreak.

The new budget iPhone, rumored to be marketed as iPhone SE 2020 or iPhone 9, is expected to be powered by Apple’s A13 processor, which is found in iPhone 11, 11 Pro and 11 Pro Plus.

Moreover, the device will be available in three color options and storage tiers and will look similar to iPhone 8. Battery life of the iPhone is expected to improve due to the removal of 3D Touch.

Per a Reuters report that cited Counterpoint Research data, global smartphone sales declined 14% in February. China sales plunged 38% year over year. Apple reportedly sold 494,000 iPhones in China during the month, plunging 61% from 1.3 million in the year-ago period.

Hence, the launch of the low-priced iPhone might help Apple gain from upgrades, particularly with iPhone 6 users whose models no longer receive new major software updates.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM)

Apple Inc. revenue-ttm | Apple Inc. Quote


Apple’s iPhone Prospects Hurt by Coronavirus

Apple’s shares have been down 16.6% on a year-to-date basis, primarily due to the coronavirus impact. Management in mid-February stated that it might not be able to match its quarterly revenue expectations issued on Jan 28, 2020 due to iPhone’s supply-chain disruption. Earlier projections for this tech biggie’s second-quarter fiscal 2020 revenues were between $63 and $67 billion.

The coronavirus pandemic that originated in China understandably dimmed iPhone’s demand. While factories in the country resumed business activities, Apple is facing weakening demand as the nations across the world enforce social distancing.

Apple is now also expected to defer the launch of its first 5G-supported iPhone device. The delay can be attributed to supply-chain constraints as well as anticipations of sluggish demand in the wake of the significant coronavirus impact on the economy.

However, Apple’s manufacturing partner Foxconn expects the 5G-enabled devices to be ready for launch by autumn so that the company can capitalize on the most important holiday season.

Notably, Apple has been ramping up its hiring efforts from Intel (INTC - Free Report) and Qualcomm (QCOM - Free Report) to work on 5G modems. Further, beginning 2021, all iPhone models are expected to support 5G. Qualcomm and Broadcom (AVGO - Free Report) are anticipated to supply 5G modems and RF power amplifiers, respectively.

Notably, Apple, which has a Zacks Rank #3 (Hold), will likely have its own modem by 2022 or 2023 that will reduce its dependence on Qualcomm. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, the coronavirus-induced interruption can now put Apple further behind Samsung in the 5G-enabled smartphone device space. Samsung enjoys a first-mover’s advantage in the 5G-enabled handset market owing to its solid portfolio.

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