Apple expects lower-than-expected shipments of high-end iPhone 14 models after a significant production cut at a virus-infected factory in China, dampening sales prospects for the year-end season.
Solid demand for iPhones has left Apple a rare bright spot in the global tech sector, which is suffering from austerity measures due to rising inflation and interest rates.
But the California-based company has fallen victim to China’s strict zero-COVID-19 policy, which has already prompted many global companies, including Ester Lauder Companies and Canada Goose Holdings, to close stores in China and lower global forecasts. year to decrease.
“The facility is currently operating at significantly reduced capacity,” Apple said in a statement on Sunday, without explaining how much production has been affected.
“We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models.
“However, we now expect lower deliveries of iPhone 14 Pro and iPhone 14 Pro Max than we previously expected.”
Reuters reported last month that iPhone production could fall by as much as 30 percent in November at one of the world’s largest factories due to the tightening of COVID-19 restrictions in China.
Apple’s main factory in Zhengzhou in central China, which employs about 200,000 people, has been rocked by dissatisfaction with strict measures to contain the spread of COVID, with many workers fleeing the site.
Market research firm TrendForce said last week it had cut its expected iPhone shipments for the December quarter by 2-3 million units, from 80 million earlier, due to problems at its Zhengzhou factory. It said the investigation of the situation showed that the plant’s utilization rate had fallen to about 70 percent.
Apple, which launched sales of the new iPhones in September, said customers would have to wait longer to receive their new products.
The world’s most valuable company with a market cap of $2.2 trillion ($3.4 trillion), forecast in October that revenue growth would fall below 8 percent in the December quarter.
“Anything that affects Apple’s manufacturing obviously affects their stock price,” said Quincy Krosby, 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 about whether there is any truth to the consistent rumors that authorities are discussing or some of the the measures will be lifted in the first quarter.”
Over the weekend, China reported its highest number of new COVID-19 infections in six months, a day after health officials said they were sticking to strict coronavirus restrictions, likely disappointing investors’ recent hopes for an easing.