《TAIPEI TIMES》 Apple warns on iPhone production

OUTLOOK REVISED DOWN: Hon Hai Precision Industry Co said that its fourth-quarter earnings this year would also take a hit from the COVID-19 lockdowns in China

/ AFP, BEIJING

Apple Inc on Sunday warned that customers would face longer wait times for iPhones with the holiday season approaching, after COVID-19 restrictions in central China “temporarily impacted” production at the world’s largest factory producing the smartphone.

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Foxconn Technology Group （富士康科技集團）, Apple’s principal subcontractor, locked down its massive factory in Zhengzhou last month after a spike in infections — in line with China’s “zero COVID-19” policy. In a separate statement yesterday, the company, known as Hon Hai Precision Industry Co （鴻海精密） in Taiwan, said its fourth-quarter earnings this year would take a hit from China’s COVID-19 lockdowns.

Panicking workers last week had fled the site on foot in the wake of allegations of poor conditions at the facility, which employs hundreds of thousands of workers.

“COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China,” California-based Apple said in a statement late on Sunday. “The facility is currently operating at significantly reduced capacity.”

Despite strong demand for Apple’s products ahead of the holiday season, “we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated,” it said. “Customers will experience longer wait times to receive their new products.”

Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year, people familiar with its plans said.

The company and its suppliers now aim to make 87 million devices or fewer, compared with a target of 90 million units earlier, the people said, asking not to be named discussing private information.

The reduction is primarily due to softer demand for the iPhone 14 and 14 Plus models, cheaper alternatives to the high-end Pro offerings.

That is in addition to supply problems in places such as Zhengzhou.

“In a normal situation, almost all the iPhone production is happening in Zhengzhou,” Counterpoint analyst Ivan Lam （林科宇） said.

The company was initially “cautiously optimistic” about its fourth-quarter earnings, “but due to the pandemic affecting some of our operations in Zhengzhou, the company will ‘revise down’ the outlook for the fourth quarter,” Foxconn said in a statement.

It did not give any statistical projection for how badly it expected earnings to be hit.

“This is a dark sign of the ‘zero COVID’ policy in China impacting production for Apple with Foxconn,” Wedbush Securities Inc analyst Dan Ives said. “It confirms the [Wall] Street’s fears with Apple this quarter and will be an albatross on the tech market this week.”

Additional reporting by Bloomberg

新聞來源：TAIPEI TIMES