If you are looking forward to the latest Apple product range (AAPL) – Get Report of Apple Inc. products from the first launch event held online last week, there could be an unexpected incident that could disrupt your plans to upgrade to the new low-cost iPhone SE or the latest iPad Air 5 or Mac Studio extremely popular.
Apple’s largest iPhone maker, Foxconn Technology Group, has “suspended” operations in China’s industrial hub Shenzhen after the number of Covid-19 cases spiked in the region.
“Foxconn’s operations in Shenzhen China have been suspended from March 14 onwards to comply with the new COVID-19 policy of the local government,” according to an email message widely shared on the Internet. media. local government,” Foxconn added.
Foxconn has specifically suspended production at its Longhua and Guanlan factories in Shenzhen, as reported by Nikkei Asia.
“Due to our diverse manufacturing locations in China, we have adjusted our production lines to minimize the possible impact,” Foxconn added in its statement.
These production outages often lead to global chip shortages that affect several sectors and lead to production delays for products including smartphones, laptops, electronic devices, and more. electronics and other automobiles.
Last year, Apple’s iPhone posted record sales during the holiday shopping quarter despite losses of more than $6 billion due to supply chain bottlenecks.
What does this mean for your iPhone?
Foxconn’s manufacturing facilities in Shenzhen, southern China, are considered core hubs for the production of iPhones as well as some iPads and computers.
Wedbush analyst Dan Ives estimated that if the Covid restrictions last for 2-3 weeks, it could affect overall iPhone production by 1% to 2% for the quarter, in an interview with Yahoo Finance.
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“That’s worrisome. Most of the output comes from that plant. If this goes on for more than a week, it starts to become a concern. For now, Apple could move to manufacturing plants. across China, but this will add fuel to the fire,” said Ives.
Apple also has a large manufacturing center in Zhengzhou, Henan Province, China, where things continue to go smoothly.
Foxconn is trying to minimize the damage by deploying backup factories to keep up with production targets.
“Much of the initial engineering prototyping and research and development work [for Apple iPhones] carried out at Foxconn’s facilities in Shenzhen,” Nikkei Asia reported.
In November last year, Apple’s largest iPhone maker also said that the global supply chain crisis is expected to last until the second half of 2022.
Product sales soar despite supply constraints
At the end of Apple’s first fiscal quarter, the tech giant saw revenue growth across all product categories, with the exception of the iPad, which it said was subject to supply constraints. “particularly pronounced”.
In March, we’re saying where we’ll be – we’ll do better or have fewer restrictions than we had in Q12,” said Apple CEO Tim Cook. in an earnings call from January.
On the product front, Apple’s revenue jumped 9% to $104.4 billion at the end of the first fiscal quarter ended December 25, despite significant supply constraints.
iPhone revenue grew 9% year over year to an all-time record of $71.6 billion.