Apple Warns Of Sales Downturn Due To Coronavirus Outbreak In China, Says Ramp Up Slower Than Anticipated

Apple announced on Monday (17 February) that will it not meet its revenue projections for the quarter due to the coronavirus outbreak in China.

The company said that its iPhone production and Chinese demand for its products were being impacted by the severity of the disease.

Apple said the virus outbreak in China was adversely impacting the production of the flagship iPhone with manufacturing sites in the country “ramping [back] up more slowly” than initially anticipated.

“While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide. “ the comapny’s staement said

The company also flagged the slowing customer demand had also been severely impacted in China. “All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic,” it read, though retail locations are “gradually reopening.”

The company however said that outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations.

Apple had originally projected record revenue of between $63 billion and $67 billion for the current quarter, but now says it will “provide more information” in an April earnings call.

Apple’s share of the Chinese smartphone market has been declining steadily, as it faces tough competition from homegrown tech giants such as China’s Huawei Technologies Co. that markets increasingly sophisticated phones at a lower price tag.

Apple’s share of the Chinese smartphone market has already been contracting. It was estimated to be 7.8% in the first three quarters of 2018 from a peak in 2015 of 12.5%, according to Canalys, a market research firm. Apple was China’s No. 3 handset maker, measured by unit sales, in 2015, according to International Data Corp. For the first three quarters of 2018, Apple ranked as the fifth-largest seller in China.

Analysts have estimated that the virus may slash demand for smartphones by half in the first quarter in China, which is the world's biggest market for the devices.