COVID-19 restrictions in China are affecting Apple’s business

Despite the ongoing COVID-19 restrictions in China, it appears that even for several years, Apple will take time before the tech giant branches out from its China-based manufacturing companies.

As highlighted in the latest Counterpoint research, the current restrictions are resulting in a decreased number of Apple products being produced, which is affecting Apple’s business globally.

As told by Apple’s officials, the company has decided to minimize the production of its latest series in China, as the industry is not working at its full capacity. To counter this, Apple opened many manufacturing centers away from China—in Vietnam and India—but the number of devices that can be made in these industries is very limited compared to the Chinese industry.

Based on the current situation, the company suffered a loss as the shares in the market came down by twenty percent so far in 2022 with one and a half months still left on the calendar.

Fieldhack shared a suggestion with the company that the large number of employees Apple hired in China could be used to negotiate with the Chinese authorities. By highlighting the influence Apple holds in China, they can bargain with respected government officials to not take steps against the United States.

Though the demand for the latest iPhone generation is very high, due to low production, Apple users have to wait sometime before the company can meet the demand.

Samik Chatterjee, an analyst for JPMorgan, pointed out that to receive the delivery of a pre-booked iPhone 14, the buyer has to wait at least a month before receiving it, whereas, for the low-generation iPhone, the delivery hardly takes a week.

With the sudden lockdown that keeps happening in China, the company is unable to keep the production rate stable. Users want to use the latest generation and are not interested in using the lower ones.

With the current situation in Zhengzhou, it is expected that the production rate for the iPhone 14 might come down by ten percent. However, Fieldhack believes that the company will be able to get itself out of this situation by utilizing other industries that are functional in India or Vietnam.

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