Apple warns of hit to iPhone shipments from China COVID disruption

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[1/5] A antheral holds an iPhone 14 arsenic Apple Inc's caller models spell connected merchantability astatine an Apple store successful Beijing, China, September 16, 2022. REUTERS/Thomas Peter/File Photo

  • Apple expects little shipments of iPhone 14 Pro and Pro Max
  • Apple says a China works operating astatine sharply reduced capacity
  • Apple supplier Foxconn revises down Q4 outlook

TAIPEI, Nov 7 (Reuters) - Apple Inc (AAPL.O) expects little shipments of high-end iPhone 14 models than antecedently anticipated pursuing a important accumulation chopped astatine a virus-blighted works successful China, dampening its income outlook for the year-end vacation season.

Solid request for the caller iPhones has helped Apple stay a uncommon agleam spot successful the planetary tech assemblage that has been battered by spending cutbacks owed to surging ostentation and involvement rates.

But the Cupertino, California-based institution has present fallen unfortunate to China's rigorous zero-COVID-19 policy, which has already prompted many planetary firms including Estee Lauder Companies Inc (EL.N) and Canada Goose Holdings Inc (GOOS.TO), to unopen their stores successful China and chopped full-year forecasts.

"The installation is presently operating astatine importantly reduced capacity," Apple said successful a connection connected Sunday without elaborating however overmuch accumulation has been impacted.

"We proceed to spot beardown request for iPhone 14 Pro and iPhone 14 Pro Max models. However, we present expect little iPhone 14 Pro and iPhone 14 Pro Max shipments than we antecedently anticipated," it said.

Reuters past period reported that accumulation of Apple's iPhones could slump by arsenic overmuch arsenic 30% astatine 1 of the world's biggest factories successful November owed to tightening COVID-19 curbs successful China.

Its main Zhengzhou works successful cardinal China, which employs astir 200,000 people, has been rocked by discontent implicit stringent measures to curb the dispersed of COVID-19, with galore workers fleeing the site.

Market probe steadfast TrendForce said past week it has chopped its iPhone shipments forecast for the December 4th by 2-3 cardinal units, from 80 cardinal previously, owed to the troubles astatine the Zhengzhou plant, adding that its probe of the concern recovered that the factory's capableness utilisation rates were present astir 70%.

Apple, which launched income of the caller iPhones successful September, said customers volition acquisition longer hold times to person their caller products.

The world's astir invaluable institution with a marketplace capitalisation of $2.2 trillion forecast successful October its gross maturation would autumn beneath 8% successful the December quarter.

"Anything that affects Apple's accumulation evidently affects their stock price," said Quincy Krosby, main planetary strategist astatine LPL Financial successful Charlotte, North Carolina.

"But this is portion of a overmuch deeper communicative - the uncertainty surrounding the aboriginal of the Chinese economy... These headlines are portion of the ongoing saga arsenic to whether determination is immoderate information to the accordant rumours that authorities are discussing whether immoderate of the measures volition beryllium lifted successful the archetypal quarter."

China connected Sunday reported its highest fig of caller COVID-19 infections successful six months, a time aft wellness officials said they were sticking with strict coronavirus curbs, apt disappointing caller capitalist hopes for an easing.


Taiwan's Foxconn (2317.TW), the relation of the Zhengzhou factory, said connected Monday it was moving to resume afloat accumulation astatine the works arsenic soon arsenic possible, and revised down its 4th fourth outlook.

It said it would instrumentality caller measures astatine the works to curb the dispersed of COVID-19, including a strategy that would restrict moving employees' travel to betwixt their dormitory and mill area.

The works besides kicked disconnected a recruitment drive connected Monday, offering workers who had near the works betwixt Oct. 10 and Nov. 5 a one-off bonus of 500 yuan ($69) should they take to return. It besides advertised salaries of 30 yuan an hour, higher than the 17-23 yuan a hr basal salaries that immoderate workers told Reuters they received.

Shares successful Foxconn fell 0.5% successful aboriginal commercialized connected Monday, lagging a 1.2% emergence successful the broader scale (.TWII).

The Zhengzhou Airport Economy Zone which houses the iPhone mill entered a seven-day lockdown connected Wednesday whose measures included barring each residents from going retired and lone allowing approved vehicles connected roads wrong that area. work much

Foxconn, the world's largest declaration electronics maker, said successful a connection that the provincial authorities successful Henan, wherever Zhengzhou is located, "has made it wide that it will, arsenic always, afloat enactment Foxconn successful Henan".

"Foxconn is present moving with the authorities successful concerted effort to stamp retired the pandemic and resume accumulation to its afloat capableness arsenic rapidly arsenic possible."

Foxconn, formally Hon Hai Precision Industry Co Ltd, is Apple's biggest iPhone maker, accounting for 70% of iPhone shipments globally. It has different smaller accumulation sites successful India and confederate China.

Having antecedently guided for "cautious optimism" successful the 4th quarter, Foxconn said it volition "revise down" its outlook fixed events successful Zhengzhou.

The 4th fourth is traditionally the blistery play for Taiwan's tech companies arsenic they contention to proviso cellphones, tablets and different electronics for the year-end vacation play successful Western markets.

Foxconn releases third-quarter net connected Nov. 10. It declined to supply further remark connected however the latest curbs successful its mill would beryllium implemented.

($1 = 7.2135 Chinese yuan renminbi)

Reporting by Ben Blanchard successful Taipei, Caroline Valetkevitch successful New York and Jaiveer Shekhawat successful Bengaluru; Additional reporting by Brenda Goh; Writing by Miyoung Kim; Editing by Daniel Wallis and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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