Apple says iPhone supplies hurt by anti-COVID curbs in China
Apple is warning customers they'll have to wait longer to get its latest iPhone models after anti-virus restrictions were imposed on a contractor's factory in central China.
The company announcement Sunday gave no details but said the factory operated by Foxconn in the central city of Zhengzhou is "operating at significantly reduced capacity."
"We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated," the company said. "Customers will experience longer wait times to receive their new products."
Foxconn Technology Group said earlier it imposed anti-virus measures on the factory in Zhengzhou following virus outbreaks. Apple and Foxconn previously hadn't responded to questions about how iPhone production might be affected. Last week, access to the industrial zone where the factory is located was suspended for one week following a surge in infections in Zhengzhou and the departure of workers from the factory.
The lockdown is expected to cause further disruptions to the plant, which in recent weeks has seen a spate of coronavirus infections and an exodus of workers, some of whom fled the factory on foot.
"Gut punch"
"After battling the macro headwinds and delivering a strong September quarter/guidance in a stark contrast to the rest of Big Tech, this latest zero COVID situation is an absolute gut punch for Apple in its most important holiday quarter," Wedbush analysts said in a report.
They added, "If Zhengzhou remains at lower capacity the next few weeks, this would cause clear iPhone Pro shortages into the all-important Christmas time period, especially in the U.S."
Foxconn said in a statement that it is revising its outlook for this quarter downward due to the lockdown.
"Foxconn is now working with the government in a concerted effort to stamp out the pandemic and resume production to its full capacity as quickly as possible," the company said Monday.
It also said that the provincial government has said it will "fully support" Foxconn in managing the plant's pandemic prevention and operation situation.
In a post on the Zhengzhou plant's WeChat social media account Sunday, the company said a "closed loop" system would restrict its employees' travel between their dormitories and the factory area to manage risks of COVID-19 transmission.
The last quarter of the year is typically a busy season for companies like Foxconn as they ramp up production ahead of the end of year holiday rush.
"We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker," Apple said.
While other big technology companies have struggled this year as the economy slows, Apple has proved more resilient. Its fiscal fourth-quarter revenue rose 8% from the same time last year to $90.1 billion, while its profits rose roughly 1% to $20.72 billion.