Apple to suffer 50% Q1 revenue loss in China market: expert

By Yin Yeping Source:Global Times Published: 2020/3/3 13:39:13

The coronavirus outbreak has seriously affected the operation of Apple's supply chain. Photo: cnsphoto

The business of Apple Inc. may suffer a revenue decline of 50 percent year-on-year for the first quarter this year in China market, and up to10 percent loss globally, as the company's major supplier Foxconn scrambles to resume production amid the coronavirus attack.

Upstream parts manufacturers have not resumed production, logistical distribution network is seriously disrupted, and also, Apple's own store business hours are being reduced, which are all issues impacting Apple's global business outcome. 

Liang Zhenpeng, a Beijing-based industry expert, predicted Apple's production is unlikely to return to normal until the second half of 2020, and that its turnover from January to March may fall by at least 10 percent globally and by 50 percent in China.

Although there is still some time before the company unveils its next fiscal report, evidence suggests that the negative impact of the epidemic on the tech company's business will be massive, primarily because of the disrupted supply chain in China, experts say.

A human resources manager surnamed Wang at the Foxconn factory in Zhengzhou, Central China's Henan Province, said that hiring workers is underway but now is not an easy job to employ qualified hands.  .

"Our factory's full capacity is 230,000 workers, but we are now short of 50,000 workers," the manager said. 

She added that the employment process during the epidemic is troublesome as each employee needs a health certificate, which may take some time to attain during the difficult time.

Another worker who asked not to be named told the Global Times on Tuesday that the factory had resumed operation, but since many migrant workers have not been able to return, the production line cannot be fully resumed.

A manager of Foxconn's factory in Taiyuan, North China's Shanxi Province, surnamed Li, told the Global Times in a previous interview that although work resumed on February 12, the resumption rate is about 30 percent and the recruitment procedure is slow during the epidemic.

"For the sake of epidemic prevention and safety, workers returning from other provinces must be quarantined for 14 days," she said.

"Capacity is not completely back to normalcy," said Liang, noting that Apple's ability to return to normal production will depend on Foxconn's ability to recruit new workers. 

He noted that even if Foxconn is able to fully resume production, Apple's production line may not return to normal, in a short time.

"Foxconn assembles machines, but there are many small and medium-sized factories that help make parts, so ultimately, the coronavirus outbreak has seriously affected the operation of Apple's supply chain," Liang said.

What is also worrying is that the mobile phone industry is fast upgrading type upgrades product types relatively quickly, meaning Apple's slow-selling phones may go out of fashion after three to six months. 

While most domestic mobile phone brands in China have launched 5G devices, Apple has not. The outdated iPhones are likely to be sold at a discount, and that will mean a loss, Liang said.


blog comments powered by Disqus