Apple Could Be Short of iPhones Because of Factory Disruptions in China (Published 2022) (2024)

Weeks after expressing optimism about the global economy and its business, Apple on Sunday warned that its sales would fall short of expectations because a key iPhone factory in China had been shut down by a coronavirus outbreak.

The abrupt change in its business prospects are the latest reminder of the risks of the company’s concentrated manufacturing supply chain in China. Once an operational strength that afforded Apple the flexibility to have legions of workers crank out iPhones to meet global demand, its reliance on China has become a liability as the country’s commitment to a zero Covid-19 policy has led it to lock down cities, businesses and factories.

In mid-October, Apple’s largest iPhone manufacturer, Foxconn, shut off the primary plant in Zhengzhou as coronavirus cases spiked. Foxconn closed the facility to the outside world and walled roughly 200,000 workers inside its grounds. Production of iPhones has continued at “a significantly reduced capacity,” Apple said in a statement on Sunday. The company added that its production woes would mean that customers would face longer wait times between the purchase and delivery of its high-end iPhone 14 Pro and 14 Pro Max.

“We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker,” Apple said in its statement.

The shutdown is the second to affect Apple this year. It lost about $4 billion in sales of iPads and Macs over the spring and summer after factories outside of Shanghai were closed to limit the spread of Covid-19.

Apple’s setback comes amid a larger downturn in the prospects for the tech industry. Shares of Alphabet, Amazon and Meta have tumbled this year amid an economic slowdown that has caused e-commerce and advertising sales to falter. Apple’s share prices has slipped but avoided the steep declines of its peers in large part because it continued to deliver strong business results.