Coronavirus Outbreak Creates iPhone Shortage
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The coronavirus outbreak outbreak has "temporarily constrained" the iPhone supply chain in China, which has been hit hardest by the illness. As a result, Apple expects to miss the $63 billion to $67 billion in sales it projected to rake in this quarter.
"These iPhone supply shortages will temporarily affect revenues worldwide," the company said in an investors’ note.
The good news is that Apple's iPhone factories in China are based outside of Hubei province, which is ground zero for the outbreak. Nevertheless, the Chinese government's attempts to contain the coronavirus' spread has prevented workers and shipments from freely flowing across the country. "While all of these facilities have reopened—they are ramping up more slowly than we had anticipated," Apple added.
Apple issued the investors' note days after Nvidia also said it expects the coronavirus to dampen production and demand for the company's graphics cards in China . “While it is still early and the ultimate effect is difficult to estimate, we have reduced our Q1 revenue outlook by $100 million to account for the potential impact,” Nvidia Chief Financial Officer Colette Kress said last week.
Indeed, the ongoing outbreak, which has sickened more than 70,000 people in China, is forcing many electronics vendors, including Nintendo and Sony, to warn about potential disruptions to their businesses.
Research firm IDC is pretty grim on the outlook for the local Chinese market. It expects PC, smartphone, and tablet sales in the country to fall by 30 percent this quarter.
But despite the outbreak, one analyst, Ming-Chi Kuo, expects Apple to still go ahead and introduce a new low-cost iPhone, and new iPad Pro, during this year’s first half.