Apple Warns Of Lower IPhone Shipments Due To Chinese Covid Restrictions

Apple Inc on Sunday said it expects lower iPhone 14 Pro and iPhone Pro Max shipments than previously anticipated as COVID-19 restrictions temporarily disrupt production at an assembly facility in...

Apple Inc expects shipments of premium iPhone 14 models to be lower than previously expected after a massive production cut at a virus-infested factory in China slashed its sales forecast for the busy year-end holiday season.

Demand is on the rise

Smartphones assembled at Foxconn's Zhengzhou plant have helped Apple remain a bright spot in the tech sector hurt by consumer spending cuts amid rising inflation and interest rates.

But the seller in Cupertino, California, fell victim to the policy of not spreading the Corona virus in China,

Which has seen global companies including Canada Goose Holdings Inc and Estee Lauder Companies Inc close local stores and lower expectations.

"The facility is currently operating at significantly reduced capacity," Apple said Sunday, without specifying the size of the reduction.

"We continue to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models," she said in a statement.

However, we now expect iPhone 14 Pro and iPhone 14 Pro Max shipments to be lower than we previously expected."

Reuters reported last month that iPhone production could fall by as much as 30% in November at Foxconn's Zhengzhou plant.

One of the largest in the world - due to COVID-19 restrictions.

The plant in central China, which employs about 200,000 people, has been shocked by the strict measures to curb the spread of COVID-19, with many workers fleeing the site.

Market researcher TrendForce last week lowered its forecast for iPhone shipments for October.

December by 2 million to 3 million units, from 80 million, due to plant problems, adding that its investigation found capacity utilization rates of about 70%.

Apple, which began selling its iPhone 14 lineup in September, said customers should expect longer waiting times.

"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 authorities are debating whether to lift some measures in the first quarter.”

On Monday, China reported the largest number of new COVID-19 infections in six months, with the world's second infection disrupted.

The largest economy spread nationwide since October.

Over the weekend, health officials said they would stick to strict coronavirus restrictions, disappointing investors hoping for relief.

Meanwhile, Apple expects to produce at least 3 million fewer iPhone 14 phones this year than planned due to weak demand for low-end models.

Bloomberg News reported on Monday, citing people familiar with the plan.

The world's most valuable company, with market capitalization of $2.2 trillion, last month forecast revenue growth from October to December to slow from 8% the previous quarter -- although market watchers viewed that favorably in a troubled sector.

“Given that Apple only reported positive guidance two weeks ago, we believe this indicates the potential for a longer and more severe shutdown,” Credit Suisse analysts said, expecting to push iPhone sales into later quarters rather than lose them.

They estimated that Apple's revenue would rise 3% in the current quarter,

With iPhone sales growing 2% to $73 billion.

Foxconn CUTS OUTLOOK

Taiwan's Foxconn is the world's largest contract electronics maker and Apple's largest iPhone maker, accounting for 70% of shipments globally. It has iPhone production sites in India and southern China,

But the largest is in Zhengzhou, in eastern China's Henan Province.

Local officials recently commented on cases of COVID-19 at the plant.

Foxconn declined to reveal the number of infections or comment on the conditions of those injured.

on Monday,

She said she is working to resume full production in Zhengzhou as soon as possible. A person familiar with the matter told Reuters that Foxconn's target was the second half of November.

At the request of the local government, Foxconn said it will implement measures to curb the spread of COVID-19,

Including restricting the movement of employees between their university residence and the factory area.

The manufacturer has also launched a recruitment drive, offering workers who left the factory between October 10 and November 5 a one-time bonus of 500 yuan ($69) if they return. It also announced salaries of 30 yuan an hour,

Up from 17 to 23 yuan basic salaries that some workers told Reuters they received.

The Zhengzhou Airport Economic Zone, which houses the iPhone factory, went into a seven-day lockdown on Wednesday with measures that included preventing residents from going outside and only allowing access to approved vehicles.

Foxconn said the provincial government "has made it clear that they will fully support Foxconn as always".

"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."

It had earlier expressed "cautious optimism" at its fourth session.

Guiding quarterly earnings, Foxconn said Monday that it will revise its forecast in light of events in Zhengzhou.

BY
ProBuzzFeed