Apple Inc warned on Sunday that consumers will face longer wait times for iPhones before the season, after COVID-19 restrictions in central China “temporarily affected” production at the world’s largest factory that makes the smartphone.
Foxconn Technology Group (富士康科技集團), Apple’s main contractor, closed its huge factory in Zhengzhou last month after a surge in infections, in line with China’s “zero COVID-19” policy. Yesterday, in a separate statement, the company, known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan, said its fourth-quarter profit this year would be affected by COVID-19 lockdowns in China.
Last week, panicked staff fled on foot following reports of poor situations at the plant, which employs thousands of employees.
Photo: Ann Wang, Reuters
“COVID-19 restrictions have temporarily affected the main meeting plant for iPhone 14 Pro and iPhone 14 Pro Max located in Zhengzhou, China,” Apple said Sunday. “Lately, the facility is operating at a particularly reduced capacity. “
Despite strong demand for Apple products ahead of the holiday season, “we now expect shipments of iPhone 14 Pro and iPhone 14 Pro Max to decline from what we had anticipated in the past,” he said. “Customers will delight in a longer wait. “times to get your new products. “
Apple plans to produce at least 3 million fewer iPhone 14 phones than planned this year, other people familiar with its plans said.
The company and its suppliers are now aiming to make 87 million devices or less, up from a previous target of 90 million devices, said the sources, who asked to be named discussing personal information.
The reduction is basically due to the decrease in demand for the iPhone 14 and 14 Plus models, less expensive opportunities for high-end Pro offerings.
This is in addition to the upheavals in places like Zhengzhou.
“In one situation, almost all iPhone production is located in Zhengzhou,” said Counterpoint analyst Ivan Lam (林科宇).
First, the company was “cautiously optimistic” about its fourth-quarter earnings, “but due to the pandemic affecting some of our operations in Zhengzhou, the company will ‘downgrade’ the outlook for the fourth quarter,” Foxconn said in a statement. .
He did not give any statistical projections on the expected impact on earnings.
“This is a grim sign of the ‘zero COVID’ policy in China that is affecting Apple’s production with Foxconn,” said Dan Ives, an analyst at Wedbush Securities Inc. “This confirms [Wall] Street’s fears with Apple this quarter and will be a drag on the tech market this week. “
Additional from Bloomberg