Apple predicts billions in lost revenue due to China supply constraints amid lockdowns

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Beijing’s strict COVID-19 control policies have severely limited Apple’s production of consumer products, according to one of its suppliers.

In April, the iPhone The manufacturer predicted that supply constraints would cost the company up to $8 billion in revenue for the current quarter.

Taiwanese contract manufacturer Pegatron, one of Apple’s largest suppliers of specific iPhone models, said on May 12 that operations at its main assembly plant in Shanghai were restricted by the whole city lockdown metrics and the company expected production to decline this quarter. The company did not provide further details on the specific volume of the production cuts, South China Morning Post (SCMP) reported.

The Epoch Times has contacted Pegatron for comment.

The logo of Pegatron, which assembles the electronics for Apple iPhones, in Taipei, Taiwan, June 20, 2017. (Tyrone Siu/Reuters)

Pegatron is the second largest iPhone assembler after Foxconn Technology Group, another Taiwanese subcontractor. Pegatron has assembly plants in Shanghai and Jiangsu provinces that focus on iPhones.

On April 12, Pegatron announcement that it would temporarily suspend operations at its factories in Shanghai and nearby Kunshan in Jiangsu province, a blow to Apple’s iPhone assembly line.

“The plant resumption date is to be communicated by the local government,” the company said in an official statement, noting that it would work with local authorities to resume operations as soon as possible.

At the time, MacBook maker Quanta and iPad maker Compal Electronics also temporarily closed factories in some Chinese cities, according to Nikkei Asia. These closures have caused a delay of approximately two months in the delivery of MacBook Pros in Japan, the United States and other countries.

More than 90% of Apple products sold worldwide are made by manufacturers under contract with factories in China, according to the Chinese edition of Nikkei. Another recent Nikkei Aissa An analysis found that about half of Apple’s top 200 suppliers have facilities in and around Shanghai, where citywide COVID-19 shutdowns have been in effect since April 5.

According to a report citing Apple’s latest available supplier list, more than 70 companies have manufacturing plants in Jiangsu province that supply the US tech giant directly. The majority of these factories are in Kunshan and Suzhou, two cities close to Shanghai. About 30 other Apple suppliers have facilities in Shanghai itself, the epicenter of China’s latest COVID-19 surge.

These include major Taiwanese contractors such as Foxconn, Pegatron, Compal Electronics, Quanta Computer and Wistron. These five companies are responsible for producing almost all of Apple’s most profitable products, such as iPhones, iPads and Macs. Any disruption to these assembly lines has an immediate impact on Apple’s global consumer electronics supply.

Under Beijing’s draconian measures against COVID-19, regions such as Zhengzhou, Shanghai and Kunshan, the three main centers of Apple’s contract assembly plants, have successively experienced lockdowns.

In a conference call with the company, Apple CFO Luca Maestri forecast up to $8 billion in lost revenue in the current quarter due to supply constraints and drops. inventory, according to the SCMP. Meanwhile, Apple CEO Tim Cook has indicated that the company continues to “seek to optimize” its supply chain.

On April 11, Apple confirmed that it had started manufacturing the iPhone 13 in India. The phone is produced at Foxconn’s factory in Sriperumbudur in the southern state of Tamil Nadu, Reuters reported.

jessica mao

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Jessica Mao is a staff writer for The Epoch Times and focuses on China-related topics. She started writing for the Chinese language edition in 2009.

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