Apple’s business is threatened by the new wave of covid that began in China and that has hospitals in that country “on the verge of collapse”, according to local officials.
Technological sector experts warn that the new outbreak generates uncertainty in Apple, a company that depends on the income from the sale of its iPhones to sustain its structure.
That there are problems in China is not a minor issue: a fifth of the revenue of the Cupertino company comes from sales in the Asian giant and more than nine out of 10 iPhones sold in the world are assembled there.
Apple is far behind samsung in the diversification of production. The South Korean company, Apple’s biggest rival in the smartphone business, left China in 2019 and has diversified assembly in at least 4 countries.
Apple iPhones have problems in China
Apple has been dealing with problems manufacturing in China since November, when the Foxconn megafactory, its largest assembler, in Zhengzhou (the so-called “iPhone City”), closed production due to a Covid outbreak.
Foxconn moved production to other factories in China and Apple signed deals with other component suppliers to try to avoid bigger problems, but it couldn’t stop manufacturing from collapsing just before Christmas sales.
In the United States, for example, customers are waiting more than 20 days to buy high-end iPhones, according to research by Swiss bank UBS.
Although the Government of China is leaving aside the political decision called “zero covid” that forces the closure of factories and quarantines in cities, in the same way, the increase in cases is translating into greater absenteeism of workers in component plants and in assembly factories.
According to Bindiya Vakildirector of Resilinc, told the Financial Timesit should be expected that there will be an impact due to absenteeism not only in factories, but also in storage, distribution, logistics and transportation facilities.
Resilinc is a Californian consultancy that analyzes the movement of more than 3 million parts and components to provide global supply chain mapping services.
Apple already warned at the beginning of November about a “significant” interruption in the production of products, especially iPhone.
The statement came a few weeks after the firm forecast a sales increase of close to eight percent.
Wall Street analysts expect Apple’s revenue for the current quarter to fall from the record $123 billion it achieved in the same period in 2021. In parallel, earnings are expected to fall more than 8 percent.
This would break a 14-quarter streak of revenue growth.
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