"I can't imagine a scenario where the supply chain isn't disrupted." Those are the words of Patrick Moorhead, a veteran electronics industry analysts talking about the coronavirus crisis and how it will affect the production of the iPhone and other electronics.
If you wanted to know why the markets are freaking out about the Wuhan virus even while it may not e a huge threat yet in the U.S., here’s your answer. China is the number one producer of goods on the planet and it is now in complete panic mode, closing entire cities and limiting communications in what is the biggest quarantine operation in history.
That’s why thinking that this operation is not going to affect supply lines within the country is nothing sort of preposterous.
Wuhan is a huge industrial hub
The epicenter of the coronavirus outbreak is considered a “central hub for transport and industry“ in China.
The area is not only one of the biggest producers of iron and steel, it’s considered a ”crucial hub in the middle of China”, with the Yangtze river going across it, three railway stations and an airport. It’s also considered a major automobile industry, electronics, optics and fiberoptics production site. In fact, 230 of the Fortune 500 companies have investment in this area.
The virus — which at the time of this writing has reportedly killed 106 out of 4,515 infected people in the Asian country — will for sure affect all this activity. And the impact will ripple through the entire industrial network of the country all the way to the coastal centers where consumer electronics products are made for western companies like Apple.
First major test: the iPhone 9
Indeed, talking about the new iPhone SE 2 (also known as the iPhone 9) to Bloomberg, Moorhead said that "if there's one major hiccup in the raw materials, fabrication, assembly, test, and shipping, it will be a disruption."
And that’s regardless of the fact that the factories that make that phone — in Zhengzhou and Shanghai — are more than 300 miles from the epidemic’s ground zero. Talking to Bloomberg’s Matthew Kanterman, those companies say they are in full alert and seemingly in damage control mode.
"We can confirm that we have measures in place to ensure that we can continue to meet all global manufacturing obligations."
Foxconn spokesperson
While Foxconn says this, it’s declining to give any specifics on how production will be affected and if there’s any disruption of production right now.
We will know soon, though, as the virus effect may impact the release date of the iPhone SE2, which is supposed to go into production next month for a March release. This will be the first serious test for both Apple’s providers. We will see if there is any delay from the rumored release dates in the coming days — or, if it finally hits the launch window, we will see what’s the availability for an iPhone that will for sure become one of the most popular on the planet.
