Apple warns iPhone 14 Pro shipments may suffer amid coronavirus disruption in China
Taipei: Apple Inc. expects shipments of high-end iPhone 14 models to be lower than expected following a massive production cut at a virus-infested factory in China, which lowered its sales forecast for the year-end holiday season.
Strong demand for new iPhones helped Apple remain a rare bright spot in a global technology sector that has been hit by spending cuts due to rising inflation and interest rates.
But the Cupertino, California-based company has now fallen victim to China’s strict no-coronavirus policy, which has already prompted several global companies including Ester Lauder Companies Inc and Canada Goose Holdings Inc to close their stores in China and halt business for a period of time. whole year. Forecasting.
“The plant is currently operating at significantly reduced capacity,” Apple said in a statement on Sunday.
“We continue to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect iPhone 14 Pro and iPhone 14 Pro Max shipments to be lower than we previously expected,” she said.
Reuters reported last month that Apple’s iPhone production could fall by as much as 30% at one of the world’s largest factories in November due to the tightening of COVID-19 restrictions in China.
Its main factory in Zhengzhou in central China, which employs about 200,000 people, has been shaken by discontent over strict measures to curb the spread of COVID-19, with many workers fleeing the site.
Market research firm TrendForce said last week that it had cut its forecast for iPhone shipments for the December quarter by 2-3 million units, from 80 million previously, due to problems at the Zhengzhou plant, adding that its investigation into the situation found that the plant’s capacity utilization rates are now around 70%.
Apple, which launched sales of new iPhones in September, said customers will see longer wait times to receive their new products.
The world’s most valuable company with a market capital of $2.2 trillion is expected in October to drop its revenue growth to less than 8% in the December quarter.
“Obviously anything that affects Apple’s production affects its stock price,” said Quincy Crosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
“But this is part of a much deeper story – the uncertainty surrounding the future of the Chinese economy… These headlines are part of the ongoing saga over whether there is any truth to the persistent rumors that the authorities are debating whether certain measures will be lifted in the first quarter.” .
China on Sunday reported the largest number of new COVID-19 infections in six months, a day after health officials said they were strictly complying. Corona Virus The restrictions, are likely to disappoint investors’ recent easing hopes.
Foxconn CUTS OUTLOOK
Taiwan’s Foxconn, the operator of the Zhengzhou plant, said Monday that it is working to resume full production at the plant as soon as possible, and revised its forecast for the fourth quarter.
It said it would implement new measures at the plant to curb the spread of COVID-19, including a system that would restrict the travel of working employees between their residence and the factory area.
Foxconn shares fell 0.5 percent in early trading on Monday, trailing a 1.2 percent rise in the broader index.
China ordered an industrial complex that houses an iPhone factory to close for seven days on Wednesday, in a move aimed at ramping up pressure on an Apple supplier as it rushes to quell worker discontent at the base.
Central China’s Zhengzhou Airport Economic Zone said it would impose “silent management” measures with immediate effect, including banning all residents from going outside and only allowing approved vehicles on the roads within that zone.
Foxconn, the world’s largest contract electronics maker, said in a statement that the provincial government in Henan, where Zhengzhou is located, “has made it clear that it will, as usual, fully support Foxconn in Henan.”
“Foxconn is now working with the government in a concerted effort to stem the epidemic and resume production at full capacity as quickly as possible.”
Foxconn, officially Hon Hai Precision Industry Co Ltd, is Apple’s largest iPhone manufacturer, accounting for 70% of iPhone shipments globally. It has other smaller production sites in India and southern China.
Having previously been guided by “cautious optimism” in the fourth quarter, Foxconn said it would “revise” its forecast in light of events in Zhengzhou.
The fourth quarter is traditionally the hot season for Taiwanese tech companies as they race to supply mobile phones, tablets and other electronic devices during the year-end holidays in western markets.
Foxconn released third-quarter earnings on November 10.
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