December 6, 2022

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Apple says China’s lockdown of ‘iPhone City’ has led to ‘significantly reduced capacity’ ahead of the holidays

2 min read

Apple Inc. said shipments of its newest premium iPhones will be lower than previously expected after China lockdowns affected operations at a supplier’s factory. 

The company continues to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models but the lockdowns mean “customers will experience longer wait times to receive their new products,” Apple said in a statement Sunday. Deliveries of iPhone 14 Pro handsets are currently listed for late November or early December, according to Apple’s website. 

The abrupt move by the Chinese government last Wednesday to lock down the area that includes the Hon Hai Precision Industry Co. plant until Nov. 9 is expected to further disrupt a factory already grappling with an on-site coronavirus outbreak, worker exodus and enforced quarantine. 

Apple said the facility is operating at “significantly reduced capacity,” while Hon Hai noted in a separate statement that it’s lowering its fourth-quarter outlook to factor in the lockdown.

The local government has ordered people and vehicles off the streets except for medical or other essential reasons, a prohibition that threatens to cut off the flow of additional workers and components needed to rev up production ahead of the holiday-season crush.

The measures may further compound the headaches Foxconn and Apple are already facing as iPhones’ sales slow in China. Apple, the world’s most valuable company, said last month it expects growth to decelerate in the current period. 

The Cupertino, California-based company didn’t provide a specific revenue forecast for the current quarter, continuing an approach it adopted at the start of the Covid-19 pandemic. But analysts estimate sales of about $128 billion, which would be an all-time record.

In the face of slowing growth, Apple has paused hiring for many jobs outside of research and development, an escalation of an existing plan to reduce budgets heading into next year, Bloomberg reported last week, citing people with knowledge of the matter.

Meanwhile, Foxconn’s plant continues to operate within a “closed loop,” or a self-contained bubble that limits contact with the outside world. That is keeping some production going. 

Apple said on Sunday it is working closely with its supplier to return to “normal production levels while ensuring the health and safety of every worker.”

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