Apple issues financial alert as outbreak hits supply chain
Apple has issued a financial alert warning that it will not meet revenue guidance for its current quarter as the coronavirus continues to severely impact Chinese industry.
The iPhone maker said that although none of its key manufacturing plants were in Hubei province, where the outbreak began, it was “experiencing a slower return to normal conditions than we had anticipated” elsewhere.
This is expected to “temporarily constrain” the worldwide supply of iPhones and lead the US tech giant to want it will not meet revenue guidance it set at the end of January.
Its revenue guidance had already factored in the impact of the outbreak, but the increasing severity of the crisis has cause it to further downgrade its outlook.
Plants that have reopened are operating at “reduced hours and with very low customer traffic”, with its five stores reopened in Beijing last week open for seven hours instead of the usual 12.
Disruption has also meant many workers have yet to return to their jobs, either due to travel disruption or instruction not to leave their homes.
Aside from production on its current range of iPhones, Apple said manufacturing on its new model due for release later this year is now two weeks behind schedule.
To rub salt in the wound its key smartphone maker Samsung is set to capitalise on Apple’s disruption as half of its smartphones are made in Vietnam, where the virus is yet to impact severely.
Insiders expect key Chinese smartphone rivals like Xioami and Huawei will also take a major hit due to the countrywide disruption, putting Samsung in an even more advantageous position.
“Samsung is better positioned to weather the virus fallout than its formidable rivals such as Huawei and Apple,” a person with knowledge of Samsung’s supply chain told Reuters.
“The virus exposed China risks. We feel fortunate that we were able to escape the risks.”
More than 70,000 confirmed cases has now been reported while the global death toll has risen to 1874, including the first confirmed death in Europe.