Apple's market share retreated slightly Friday last week, and it signified a prospect suddenly made gloom by the coronavirus outbreak in Wuhan, China. The company's supply chain has been disrupted, and continued production slowdowns could lead to revenue losses, which analysts have estimated could breach the $4 billion mark.
The decline is seen to impact on Apple's iPhone and AirPods businesses. As of February 10, production activities in the tech giant's partner factories in mainland China and Taiwan were either halted or in limited capacities.
Foxconn, the Cupertino-based company's largest contractor in China and Taiwan, has ordered production halts in Shenzhen and Zhengzhou and resumption will depend on the next health advisory from the Chinese government. As a result, it is expected that deliveries of devices will be pushed back or cut down.
According to Business Insider, production of AirPods in the current and the following quarter is forecasted to fall behind from schedule. By its own projections, Apple said earnings guidance had been adjusted downward, and the slide will hover between $3 and $4 billion.
The report, however, noted that Apple's estimate was made at the end of January, at a time when the coronavirus outbreak and its impact was not yet fully appreciated. Nearly two weeks have passed, and analysts fear that the projected revenue losses could further spike.
In the iPhone production alone, each week of a forced shutdown on all or most of Foxconn's manufacturing facilities could mean a million fewer iPhone units in the supply chain. This was based on the latest note provided by Wedbush and supported by a Trendforce market report on the same matter.
The common reading by analytic firms is that the impact of the coronavirus outbreak on Apple's supply chain will be significant, according to WCCFTech.
For a clearer perspective on how alarming the situation is, smartphone shipment in China has been predicted to drop by up to 50 percent in March 2020. The figures were revised from the earlier projection of a 7 percent slide, indicating that the industry will be bogged down by the outbreak, and Apple will not escape the impact.
"The potential revenue impact on the company due to production delays from the Coronavirus in the $3.5 billion - $4 billion range," said the same report by WCCFTech, adding that the rough estimate could still go up depending on the developments in the coming weeks.
Of note, the supply chain disruptions came at a time that sales of the iPhone have been picking up and that the AirPods have started to become a top-performing Apple product, which should indicate that the company will potentially be hit hard if the production slowdowns will drag on.
The consolation, for now, is that the projected impacts are seen to last only a calendar quarter, which Apple can only hope will not be extended.
