News of the coronavirus outbreak not only affects the health departments but also the tech industry and its market as well.
Since the outbreak, Foxconn factories, which make Apple’s iPhone and AirPods, are reportedly extending their closure. The closure will be a “shock to the system” and “disrupt the supply chain further” for Apple’s best-selling products, analyst Dan Ives from Wedbush Securities wrote in a note.
Ives guesses that every week Foxconn shuts down its remote factories, it could shave roughly 1 million iPhones off Apple’s sales. That amounts to the production of 40 million iPhones this quarter, roughly 3 to 5 million iPhones fewer than what is normally produced.
And those numbers are optimistic. It will take about one to two weeks for factories to resume full production once they reopen, Ives said. Apple could miss out on making millions more iPhones if the closures last longer.
AirPods, on the other hand, already had a shortage sparked by high demand during the holiday season. Ives said that production needs to “ramp [up] significantly once the factory goes back online to meet increasing global demand.”
During the quarterly earnings early in January, Apple CEO Tim Cook revealed that coronavirus situation in China might affect Apple’s operations. Since some suppliers are from Wuhan region, Apple is already working on mitigation plans to make up any expected production loss.
In addition to the iPhone production issues, coronavirus situation also affects Apple’s sales since less people are visiting Apple’s retail stores. In fact, Apple closed a retail store in Wuhan region and many of the stores that remain open have also reduced operating hours.
Foxconn wouldn’t specifically comment on the statuses of its factories. A report from Nikkei says that Foxconn’s plans to reopen Monday were blocked by Chinese authorities.
In an email to CNN Business, Foxconn said it does “not comment on our specific production initiatives.” The company also said it’s “working closely” with local authorities to monitor the virus.
China is slowly getting back to work on Monday after the deadly coronavirus outbreak forced many parts of the country to extend the closures from the Lunar New Year holiday by more than a week.
However, it’s still far from business as usual in the world’s second-largest economy.
So far, the coronavirus has killed more than 900 people and infected at least 40,000, mostly in mainland China. The majority of the cases are in the central Chinese province of Hubei, where life remains mostly at a standstill.
Image: gizomdo.com
