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Dow Jones Flat as Apple Aims to Reduce 5G iPhone Delays, Boeing Faulted in 737 Max Report

By Timothy Green – Jul 1, 2020 at 2:37PM

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Apple is facing mass production delays for its 5G iPhones, and Boeing's mistakes were laid out in a government report.

The Dow Jones Industrial Average (^DJI 0.00%) failed to keep up with the other major stock indices on Wednesday, roughly flat by 2 p.m. EDT. The pandemic situation in the U.S. hasn't changed: Confirmed cases are surging, and some states have been rolling back reopening measures to slow down the spread of the virus.

Apple (AAPL -1.51%) stock was up on Wednesday, while shares of Boeing (BA -5.37%) headed lower. Apple is reportedly taking steps to reduce delays with its upcoming 5G iPhones, and Boeing was faulted in a government report related to the 737 Max.

5G text over Earth.

Image source: Getty Images.

Apple working to avoid 5G delays

Apple is expected to launch a slate of 5G-enabled iPhones later this year. Less expensive models will use a slower 5G standard, while high-end models are expected to use the much faster mmWave 5G standard.

The pandemic has caused some supply chain disruptions for Apple, and the company is trying to minimize the chance that it's forced to delay the launch of its new phones. According to a report from Nikkei Asian Review, Apple is currently facing delays between one and two months for mass production of its 5G iPhones.

Nikkei's sources said that Apple is trying to cut down on the delays, with the company and its suppliers working overtime to make up for time lost due to factory shutdowns. The sources also said that Apple is now targeting 80 million 5G iPhone shipments this year, down from a previous target of 100 million.

In case the 5G iPhones are delayed, Apple is reportedly ramping up production of its older iPhones. The company has asked suppliers to build over 45 million units of older models for the second half, according to Nikkei's sources, including the iPhone XR, the iPhone 11 family, and the iPhone SE.

The tech giant will need to convince consumers that upgrading to a 5G iPhone makes sense in an economy ravaged by the pandemic. With cases of COVID-19 currently surging in some U.S. states, and with the possibility of a second wave that coincides with flu season, renewed stay-at-home orders later this year could dampen demand for Apple's pricey products.

Apple stock was up about 0.5% Wednesday afternoon. Shares are only slightly below their 52-week high.

Report finds Boeing made mistakes with 737 Max

Reuters reported on Wednesday that a report from the U.S. Department of Transportation's Office of Inspector General found that Boeing failed to submit certification documents to the Federal Aviation Administration (FAA) regarding the flight control system that was the culprit behind the two fatal crashes that grounded the 737 Max.

The report said that Boeing presented the flight control system in question as a modification of an existing system. For that reason, it was "not an area of emphasis" for the FAA. The report also included allegations of "undue pressure" from Boeing management on safety certification workers, but it said that all formally reported instances were addressed.

This report comes a few days after the FAA began evaluating the updated flight control system in the 737 Max via certification test flights. The 737 Max may be able to return to the skies this year, but Boeing remains under criminal investigation by the U.S. Justice Department. Boeing stock was down 1.2% by Wednesday afternoon.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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