The focus has changed from iPhone production out of China to iPhone demand in the U.S.

This senior official, well versed on Apple’s plans for the rest of this year, repeats exactly what we’ve noticed about the rebound in China; it’s taking place at exactly the same moment that the COVID-19 outbreak is worsening in the U.S. and elsewhere. For example, while Apple reopened all of its retail stores in China, elsewhere around the world it closed all of its brick and mortar locations although a leaked memo indicates that some of these stores might reopen early next month. The aforementioned supply chain official told Reuters, “No one is talking about manpower or material shortage (in China) anymore. Now everyone is looking at whether demand from the U.S. and Europe could keep up. The focus now is the demand from consumers in the U.S. and Europe.”

One company that Apple sources iPhone displays from has lowered the expectations of panels it will ship to Apple this year from 70 million to 58 million. This supplier says that it probably will have to pink slip some of the workers in Vietnam that help assemble the displays for Apple before they are shipped to China to be used in iPhone models.

It isn’t too late however for Apple to see strong demand for new iPhone models in the states. But this scenario would require a “V-Shaped recovery” that Canaccord Genuity analyst Michael Walkley doesn’t see coming. Instead, he says that “Our base case scenario assumes a shock to June quarter demand with steadily improving results.” Civis Analytics conducted a survey of 2,600 consumers in the states between March 18-20 and more than half said that they expect to spend the same amount on consumer electronics as before the outbreak started. But this response carried the condition that the crisis had to be contained over the next few weeks. If not, and the crisis gets worst in the states, 33% of the consumers said that they would spend more on consumer devices. The same percentage said that they would spend less with the remaining third stating that they would spend the same.

There is no doubt that the situation is confusing. One company that makes a sensor for the iPhone says that it still makes and ships parts for the handset and that for the March quarter,  it delivered more parts to Apple than it did the year before with another gain expected for the second quarter. One person familiar with the sensor supplier said, “We were given a forecast for this quarter before the pandemic, about a month ago. And now we are still producing as per the forecast given to us.”