On Monday, shares of Apple (AAPL stock) fell because to concerns that the output of iPhones from a key manufacturer in China could be reduced as a result of Beijing’s stringent ‘zero Covid’ health restrictions.
Foxconn, an important Apple (NASDAQ:AAPL) assembler that is responsible for approximately 70 percent of the tech giant’s iPhone shipments, announced on Sunday that it is working towards establishing back-up production facilities to compensate for lost output in Zhengzhou, a factory that employs 200,000 people. This comes amid reports of workers fleeing that city’s recent Covid restrictions and suggestions of a surge in onsite infections. Foxconn is responsible for approximately 70 percent of Apple’s iPhone shipments.
The corporation with its headquarters in Taiwan, on the other hand, asserted that the reports of 20,000 infections at the Zhengzhou facility were untrue.
According to a story that was published on Monday by Reuters, production in Zhengzhou could drop by as much as 30 percent in November, and Foxconn’s Shenzen facility is currently working on ways to increase production in order to minimize the downturn.
Last week, Apple CEO Tim Cook stated that demand for iPhones has remained strong, but he also mentioned that supply bottlenecks for both the 14 Pro and the 14 Pro Max continued to exist heading into the crucial holiday season.
After having their highest single-day session in more than two years on Friday, soaring more than 7.5%, Apple shares (AAPL stock) were marked 1.6% down in early Monday trading to change hands at $153.20 per. This represents the lowest price at which they have been traded since Friday.
Apple reported this week that revenue from iPhone sales increased 9.6% year over year to $42.62 billion for the three months ended in September. This figure fell short of the $43.2 billion that was expected by Wall Street. The company’s revenues as a whole, on the other hand, increased by 2% from the previous year to an all-time high of $90.15 billion, which contributed to Apple’s better-than-expected earnings of $1.29 per share for the fourth quarter.
“We did better than we anticipated, in spite of the fact that foreign exchange was a significant negative for us,” said CFO Luca Maestri, who noted that sales for the December quarter would suffer a 10 percentage point year-on-year impact from the surging U.S. dollar. “We did better than we anticipated in spite of the fact that foreign exchange was a significant negative for us,” Maestri said.
The largest technology corporation in the world also stated that Christmas quarter revenues would decrease from September levels, blaming in part an impact of 10 percentage points year-on-year from the surging U.S. dollar, which is trading near 20-year highs in comparison to its global counterparts.
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