The widespread coronavirus outbreak in China threatens Apple’s business, as supply chain experts warn that iPhone production is at increased risk of being suspended for months. .
The US tech giant has had to deal with more than a month of disruption at main assembler Foxconn’s megafactory in Zhengzhou, China, known as ‘iPhone City’, following the Covid-19 outbreak that began in October. I had to.
Foxconn has moved some of its production to other factories across China, apple A study by Swiss bank UBS found that for customers buying high-end iPhones in the U.S., the company is working with parts suppliers to alleviate the unusually long wait time of about 23 days.
as the Chinese government Subvert Covid zero policy, longer-term risks loom. Workers could be in short supply at component or assembly plants across the country.
“Many operations should be affected by absenteeism, not only in factories, but also in warehouses, distribution, logistics and transportation facilities,” said Bindiya, chief executive of Regilink, Calif., which tracks more than 3 million people. Bakir said. A component for providing supply chain mapping services.
apple Warned on November 6th There may be some “major” disruption ahead of the holiday season. The rare statement came less than two weeks after executives predicted he would see less than 8% sales growth in the critical period around Christmas.
The consensus among analysts is that bank estimates pooled by Visible Alpha put the company’s earnings in the quarter just short of the record $123.9 billion it achieved in the same period last year, while its net profit rose more than 8%. is predicted to decrease. This would break his 14-quarter streak of revenue growth as Apple is experiencing a shortage of her 15 million iPhones from her 5 million.
Many analysts initially raised their forecasts for the next six months, assuming that unfulfilled orders would be postponed rather than canceled.
But after President Xi Jinping lifts strict pandemic controls, modeling shows that one million Chinese are at risk of dying from Covid in the coming months, so Apple’s 2023 The risks to the company’s bottom line are increasing.An Apple store in Beijing’s main shopping district had to cut hours last week after all of its employees fell ill.
One-fifth of Apple’s revenue comes from sales in China, and more than 90% of iPhones are assembled in China. Smartphone rival Samsung pulled out of China in his 2019, diversifying its assembly in at least four countries.
Horace Dediou, an independent analyst at consulting firm Asymco, said a demand crisis in China could continue following Apple’s production and operational woes in recent months as consumers shift their priorities in spending habits. said there is.
“Demand increased during lockdowns in other parts of the world, but that was due to working from home and stimulus measures,” Dediu said. “Low immunity and minimal safety nets will allow Chinese consumers to hide and avoid big purchases next year.”
Apple’s most important Taiwanese suppliers, including Foxconn, Pegatron and Wistron, have responded by expanding their nascent Indian operations.
Prabhu Ram, head of industry intelligence group at CyberMedia Research in Gurgaon, India, estimates that between 7% and 8% of iPhones are assembled in India, with Taiwan’s top three suppliers being iPhone We forecast that we are targeting 18% of our assembly in India. in India by 2024.
China’s attempts to eradicate, rather than control, the disease have left the country. exposed assembly lineAlan Day, chairman of London-based supply chain consultancy State of Flux, said it has been working with the United Nations on corporate standards for responding to the Covid outbreak.
“The next two to six months will be a defining moment for Apple’s supply chain as China’s immature response to the novel coronavirus,” Day said. “The rest of the world has developed standards, but China has been largely non-existent in getting companies to adopt those standards.”
Additional report by Ryan McMorrow from China
