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Apple Ships Fewer Than Half a Million Devices from China in February

Shipments of Apple devices slumped to 494,000, from 1.27 million in February 2019.

Source: Apple

Shipments of Apple devices slumped to 494,000, from 1.27 million in February 2019. In January, its shipments had held steady at just over 2 million.

In total, mobile phone brands shipped a total of 6.34 million devices in February, down 54.7% from 14 million in the same month last year, data from the China Academy of Information and Communications Technology showed (CAICT).

Apple had initially projected revenue of $63 – $67 billion for the January-March 2020 period, following holiday quarter strength in sales from iPhone 11. The outbreak of the virus forced the company to admit it would miss that guidance due to disruption both on the supply and demand side. Apple CEO Tim Cook did state he expects the disruption to be short-term.

“I think the focus in the last few days has turned off of China onto Korea and Italy, so I think it’s very important to see what happens there, and whether something new comes out of that,” he proposed. “Our supply chain is relatively more important in China, but we have great businesses in Korea, we have suppliers in Korea, suppliers in Italy, and a great business there as well. So, we need to see as that unfolds,” Cook said in an interview with Fox Business Network’s Susan Li in late February.

Analysts predicted that iPhone sales would be dismal. “Given the total shutdown of retail stores, corporate offices and manufacturing plants in the first half of the month of February and a gradual and uncertain pace of normalcy, February shipments would likely be materially worse,” said analysts at UBS.

Many cited the struggles of key supplier, Hon Hai Precision Industry, also known as Foxconn, as an indication of continued constraints. The company said this week that it wouldn’t return to full capacity until the end of March. Foxconn said that its manufacturing facilities are currently operating at about 50% because of long staff vacations for the Chinese New Year holiday in January and the subsequent coronavirus outbreak, but that they should return to full capacity by the end of the month as more workers come back.

The company’s chairman Young Liu said despite the production shortfall, Foxconn’s customers, which include Apple and Microsoft, haven’t seen a significant drop in supply. Still, Foxconn’s revenue was down to $7.3 billion in February, compared to $8.9 billion last year, because of coronavirus. It was Foxconn’s biggest monthly revenue decline in seven years, according to a Reuters report. In the first two months of 2020, company revenue is down by a significant 14.4%.

Apple said on Friday that it will now allow employees working at its offices in Silicon Valley and Seattle to work from home instead of the office. The company called the move an “additional precaution” against coronavirus.

Apple stock was down 7.3% in pre-market trading at the time of post.

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Source: Equities News