Apple expects lower iPhone shipments due to anti-COVID policy in China
by Ben Blanchard and Jaiveer Shekhawat
TAIPEI (Reuters) – Apple is expecting fewer-than-expected shipments of its iPhone 14 Pro as health restrictions severely impact production at its subcontractor Foxconn’s mega factory in Zhengzhou, China.
“The site is currently operating at a significantly reduced capacity,” Apple said on Sunday evening, without naming a number.
“We continue to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models. However, we now anticipate that iPhone 14 Pro and iPhone 14 Pro Max shipments will be lower than we anticipated,” he added added to a press release.
Reuters reported last Monday that iPhone production at the Zhengzhou plant, one of the world’s largest iPhone manufacturing bases, could fall by 30% in November.
The recent resumption of contamination by the coronavirus responsible for COVID-19 has prompted the Chinese authorities to tighten their measures to combat the epidemic, which is affecting the operations of country-based companies such as Taiwan’s Foxconn.
However, some of the workers at the Zhengzhou plant, which employs around 200,000 people, protested these draconian travel restrictions, and many workers fled the site on October 29 after complaining on social media about their treatment.
Apple shares are down 1% in premarket trading on Wall Street.
“Anything that affects Apple’s production obviously affects its stock price,” said Quincy Krosby, LPL Financial’s head of global strategy. “But this is part of a much larger reality: uncertainty about the future of the Chinese economy.”
China recorded 5,496 new cases of local contamination with the SARS-CoV-2 coronavirus on Sunday, the highest number in six months, according to a report published on Monday, and health officials gave assurances that strict measures would be maintained.
Foxconn, the world’s top iPhone maker with 70% of global shipments, said it is working to restart production in Zhengzhou as soon as possible.
A person familiar with the situation told Reuters that the Taiwanese group hopes to achieve this in the second half of November.
(Reports on Ben Blanchard and Sarah Wu in Taipei, Caroline Valetkevitch in New York, and Jaiveer Shekhawat and Akash Sriram in Bangalore; with Brenda Goh; writing by Miyoung Kim, French version Laetitia Volga, editing by Bertrand Boucey)
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