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Apple warns of hit to iPhone shipments from China COVID disruption

Apple Inc expects lower shipments of high-end iPhone 14 models than previously anticipated following a significant production cut at a virus-blighted plant in China, dampening its sales outlook for the year-end holiday season.

Apple warns of hit to iPhone shipments from China COVID disruption gcw
First Published Nov 7, 2022, 1:09 PM IST

Following a large production reduction at a China facility infected with a virus, Apple Inc. predicts lower shipments of high-end iPhone 14 models than originally planned, which would negatively impact its sales projection for the year's end Christmas season. Apple has maintained a tight spot in the global electronics industry, which has been severely impacted by spending cuts as a result of rising inflation and interest rates, thanks in part to strong demand for the new iPhones. The strict zero-COVID-19 policy in China, which has already forced numerous international companies, like Ester Lauder Companies Inc. and Canada Goose Holdings Inc., to close its stores there and lower full-year estimates, has now fallen a victim in the Cupertino, California-based corporation.

Without specifying how much manufacturing has been affected, Apple stated in a statement on Sunday that "the plant is now working at severely reduced capacity." "The demand for the iPhone 14 Pro and iPhone 14 Pro Max models is still quite high. However, compared to what we had first predicted, we now anticipate fewer shipments of the iPhone 14 Pro and iPhone 14 Pro Max," it added.

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With many employees abandoning the site, its flagship Zhengzhou facility in central China, which employs nearly 200,000 people, has been shaken by unrest over strict efforts to stop the spread of COVID-19. Due to the problems at the Zhengzhou plant, market research firm TrendForce said last week that it has reduced its forecast for iPhone shipments for the December quarter by 2-3 million units, from 80 million previously. It added that after looking into the situation, it discovered that the factory's capacity utilisation rates were now around 70%.

Customer wait times for new items will be longer, according to Apple, which began selling the new iPhones in September. The most valuable business in the world, with a market worth of $2.2 trillion, predicted in October that its sales growth would slow to less than 8% in the December quarter.

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A day after health officials announced they will maintain tough coronavirus limitations, China on Sunday revealed the greatest number of new COVID-19 cases in six months, presumably disappointing recent market hopes for a softening.

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