If you’re looking forward to Apple’s latest sequel (AAPL) – Get the Apple Inc. report. products from its first launch event held online last week, there may be an unexpected issue that could disrupt your plans to upgrade to the new low-cost iPhone SE or the latest iPad Air 5 or the wildly popular Mac Studio. .
Apple’s largest iPhone maker, Foxconn Technology Group, has “suspended” operations in China’s industrial hub of Shenzhen following a spike in Covid-19 cases in the region.
“Foxconn’s operation in Shenzhen China has been suspended from March 14 in accordance with the local government’s new COVID-19 policy,” according to an emailed statement. widely in the media. “The date for resumption of the plant should be communicated by the local government,” Foxconn added.
Foxconn specifically suspended production at its Longhua and Guanlan factories in Shenzhen, according to to a Nikkei Asia report.
“Due to our diverse production sites in China, we have adjusted the production line to minimize the potential impact,” Foxconn added in its statement.
These production shutdowns have typically resulted in global chip shortages that affect multiple industries and lead to manufacturing delays for products such as smartphones, laptops, other electronics and automotive equipment.
Last year, Apple’s iPhone record sales recorded in the holiday shopping district despite a hit of more than $6 billion caused by supply chain bottlenecks.
What does this mean for your iPhone?
Foxconn’s production facilities in Shenzhen, southern China, are considered a hub for iPhone production as well as some iPads and computers.
Wedbush analyst Dan Ives estimated that if Covid restrictions persist for two to three weeks, it could hurt overall iPhone production by 1% to 2% for the quarter, in an interview with Yahoo Finance.
“It’s concerning. The vast majority of production comes out of this factory. If it lasts more than a week, it starts to become concerning. For now, Apple could move to other production factories across China, but it puts fuel on the fire,” Ives said.
Apple also has a large manufacturing center in Zhengzhou, Henan Province, China, where things continue to run smoothly.
Foxconn is trying to minimize the damage by deploying backup factories to keep up with production targets.
“Much of the early engineering prototyping and R&D work [for Apple iPhones] takes place at the Foxconn campuses in Shenzhen,” Nikkei Asia reported.
In November last year, the biggest iPhone maker Apple also said the global supply chain crisis is expected to last until the second half of 2022.
Product revenue soared despite supply constraints
At the end of Apple’s first fiscal quarter earningsThe tech giant saw revenue growth across all product categories except the iPad, which it said suffered from “particularly severe” supply constraints.
In March, we’re saying where we’ll have – we’ll do better or be less constrained than we had in the December quarter,” Apple chief executive Tim Cook said. in an earnings call from January.
On the product side, Apple’s revenue rose 9% to $104.4 billion at the end of the first fiscal quarter ended Dec. 25, despite significant supply constraints.
iPhone revenue grew 9% year-over-year to an all-time high of $71.6 billion.