- Apple expects lower shipments of iPhone 14 Pro and Pro Max
- Apple says a Chinese factory is operating at greatly reduced capacity
- Apple supplier Foxconn revises Q4 outlook downwards
TAIPEI, Nov 7 (Portal) – Apple Inc (AAPL.O) expects fewer than previously expected shipments of high-end iPhone 14 models after a significant production cut at a virus-hit factory in China, lowering its sales outlook for the year dampens. end vacation time.
Solid demand for the new iPhones has helped Apple remain a rare bright spot in the global tech sector, which has been battered by spending cuts amid rising inflation and interest rates.
But the Cupertino, California-based company has now fallen victim to China’s harsh zero-COVID-19 policies, which have already prompted many global companies including Estee Lauder Companies Inc (EL.N) and Canada Goose Holdings Inc (GOOS. TO) to close its stores in China and cut full-year forecasts.
“The facility is currently operating at significantly reduced capacity,” Apple said in a statement Sunday, without specifying how much production was impacted.
“We continue to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated,” it said.
Portal reported last month that production of Apple’s iPhones at one of the world’s largest factories could collapse by up to 30% in November due to tightening COVID-19 curbs in China.
The main plant in Zhengzhou, central China, which employs about 200,000 people, has been rocked by dissatisfaction with strict measures taken to contain the spread of COVID-19, with many workers fleeing the plant.
Market research firm TrendForce announced last week that it had slashed its December quarter iPhone shipment forecast by 2 to 3 million units from a previous 80 million units due to the problems at the Zhengzhou factory, adding that its investigation into the situation found that This is the case Factory Capacity utilization was now around 70%.
Apple, which started selling the new iPhones in September, said customers will experience longer waits to receive their new products.
The world’s most valuable company, with a market cap of $2.2 trillion, forecast in October that its revenue growth would fall below 8% 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 China’s economy… These headlines are part of the ongoing saga of whether to address the ongoing rumors that authorities are discussing whether some of the measures will be lifted in the first quarter.”
China on Sunday reported the highest number of new COVID-19 infections in six months, a day after health officials said they were sticking to tough coronavirus restrictions, likely dashed recent investor hopes for an easing.
FOXCONN REDUCES OUTLOOK
Taiwan-based Foxconn (2317.TW), operator of the Zhengzhou factory, said Monday it is working to resume full production at the facility as soon as possible and revised downwards its fourth-quarter forecast.
It said it would implement new measures at the plant to curb the spread of COVID-19, including a system that would restrict working employees’ travel between their dorm and the factory area.
The plant also launched a recruitment drive on Monday, offering workers who left the plant between Oct. 10 and Nov. 5 a one-time bonus of 500 yuan ($69) if they decided to return . It was also advertised with salaries of 30 yuan an hour, higher than the base wages of 17 to 23 yuan an hour some workers told Portal.
Foxconn shares fell 0.5% in early trade on Monday, lagging the broader index (.TWII) rise of 1.2%.
The Zhengzhou Airport Economic Zone, where the iPhone factory is located, entered a seven-day lockdown on Wednesday, with measures including barring all residents from going out and allowing only registered vehicles on roads within the area. Continue reading
Foxconn, the world’s largest custom electronics maker, said in a statement that the provincial government in Henan, where Zhengzhou is located, “has made it clear that it will continue to give full support to Foxconn in Henan.”
“Foxconn is now working with the government to eradicate the pandemic and resume production at full capacity as soon as possible.”
Foxconn, formerly Hon Hai Precision Industry Co Ltd, is Apple’s largest iPhone maker and accounts for 70% of global iPhone shipments. Other smaller production facilities are located in India and southern China.
After previously calling for “cautious optimism” for the fourth quarter, Foxconn said it would “revise downwards” its outlook in light of events in Zhengzhou.
The fourth quarter is traditionally the hottest season for Taiwan’s tech companies as they scramble to supply western markets with mobile phones, tablets and other electronics for the year-end holiday.
Foxconn releases third quarter results on November 10th. It declined to comment further on how the latest restrictions would be implemented at its factory.
($1 = 7.2135 Chinese renminbi yuan)
Reporting from Ben Blanchard in Taipei, Caroline Valetkevitch in New York and Jaiveer Shekhawat in Bengaluru; Additional reporting by Brenda Goh; writing by Miyoung Kim; Edited by Daniel Wallis and Christopher Cushing
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