Apple (AAPL) Shares fell again on Wednesday after officials in China ordered a seven-day shutdown around a major iPhone factory amid an ongoing Covid outbreak that could disrupt production ahead of the pivotal holiday season.
City officials in Zhengzhou ordered the shutdown, which will last until Nov. 9, at the 200,000-man factory run by Taiwanese Foxconn, a major Apple assembler responsible for about 70% of iPhone shipments. the technology giant. Data suggests that infections in the city have tripled this week, to about 360 cases, triggering the strict lockdown response reflecting Beijing’s ‘zero Covid’ policy.
Foxconn said it would keep the plant up and running as part of a ‘closed loop’ strategy – with workers staying on site until the lockdown order expires – but it could be difficult to keep production up as workers come earlier. left the compound this week ahead of the lockdown orders.
Reuters reported Monday that production in Zhengzhou could fall by as much as 30% in November, but added that Foxconn was working on plans to increase production at its Shenzen plant to help offset the slump that is now underway. soften.
Apple shares were down 0.3% in pre-market trading to indicate an opening bell price of $150.28 apiece.
Apple CEO Tim Cook said last week that demand for iPhones has remained healthy, but noted that supply restrictions on both the 14 Pro and 14 Pro Max have continued into the major holiday season.
Last week, Apple said iPhone revenue was up 9.6% from last year to $42.62 billion for the three months ended September, excluding Street’s $43.2 billion forecast. However, total revenues were up 2% from last year to an all-time high of $90.15 billion, leading Apple to deliver better-than-expected fourth-quarter earnings of $1.29 per share.
“We did better than we expected, despite the fact that exchange rates were a major negative for us,” said CFO Luca Maestri, noting that December quarterly sales would be impacted by 10 percentage points year-over-year from the soaring US dollar.
The world’s largest tech company also said earnings for the holiday quarter would slow from September levels, citing a partial 10 percentage point year-over-year impact from the rising US dollar, which has traded nearly 20-year highs against the US dollar. its global counterparts.