The production of iPhone models was expected to deteriorate by 40 to 50 percent for the fourth quarter of 2019 until the first quarter of 2020. A market research firm claimed that the production disruptions in China significantly hurt the global supply chain and that the cutting of phone shipments would result in further losses for Apple.
According to market research firm Canalys, smartphone shipments from China, the heart of the world's global supply chain, may generate a 40 to 50 percent drop on Apple's iPhone smartphone production.
The firm claimed that the delays in production incurred by the company due to China's slowing economy and the virus outbreak could lead to further losses. It was also reported that there had been an increase of decline from analysts' previous estimate of a seven percent drop in the company's productions.
The brand's biggest assembler Foxconn announced last Friday that it would prevent its employees from resuming work by February 10, 2020, after announcing that it would resume work by that date.
According to Bloomberg, Apple also announced last week that it would have to shut down its production factories in China. At present, analysts claimed that the adverse effect of China's economy on Apple remains uncertain.
The fiscal first-quarter earnings report of Apple indicated that the company has created contingency plans if economic troubles in China remain unresolved. It claimed that it has laid down guidelines that would apply for the second quarter of 2020. The report, however, manifested that the company would lose between 63 billion to 67 billion USD by then. The estimates were derived from the report released last January 2020.
Another research furnished by Wedbush Securities claimed that about three to five million iPhone units are under the risk of being pushed from March to June if the supply chain troubles would persist to about two to three weeks.
The report claimed that Apple is vulnerable to economic changes in China because most of its production factories are in the country. The Canalys report manifested that for the first quarter of 2020, the Chinese market has shown signs that there would be worse shipment numbers for the rest of the year.
According to senior research analyst for D.A. Davidson Tom Forte, the situation would also result in lower expected revenues for Apple by the second quarter of 2020. Furthermore, he claimed that the worst hit month would be March due to the potentially disruptive outlooks on iPhone productions.
