Published - November 7, 2022 @ 11:28 AM (EET)

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On Sunday, Apple Inc. (NASDAQ:AAPL) warned shipments of its high-end iPhone models would be hindered amid China lockdowns affecting operations at a supplier's factory.

While the Cupertino, California-based tech giant continues to see strong demand for the iPhone 14 Pro and iPhone 14 Pro Max models, the lockdowns mean "customers will experience longer wait times to receive their new products," Apple said in a statement.

For this reason, Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year.

According to people familiar with the matter, the company and its suppliers now aim to make 87 million devices or fewer, compared with an earlier target of 90 million units. 

WHY IT MATTERS

China continues to pursue a "zero-Covid" policy that requires facilities like iPhone's Zhengzhou facility to operate as "closed troops," where workers isolate in dorms and work in factories separated from the outside world.

On Monday, China reported its highest number of new COViD-19 infections in six months, with disruptions to the world's second-largest economy spreading nationwide since October.

Meanwhile, JPMorgan analyst Samik Chatterjee said it currently takes 31 days to receive an iPhone 14 Pro if ordered from Apple's website, longer than the average 2-day lead time for less-expensive iPhone models.

NOW WHAT

The disruptions come at a crucial time for Apple, which launched the iPhone 14 during an unprecedented slump in global electronics demand.

"Anything that affects Apple's production obviously affects their share price," chief global strategist Quincy Krosby at LPL Financial in North Carolina said.

Last month, the world's most valuable firm, with a market capitalization of $2.2 trillion, last month projected revenue growth from October through December would slow from the previous quarter's 8%.

Elsewhere, Taiwan's Foxconn, Apple Inc's biggest iPhone maker, said it was working to resume full production at its Zhengzhou plant as soon as possible, and revised its fourth-quarter outlook.

Foxconn releases third-quarter earnings on Nov 10th.