Apple (AAPL) shares moved lower again Wednesday after officials in China ordered a seven-day lockdown around a key iPhone factory amid an ongoing Covid outbreak that could snarl production heading into the crucial holiday season.
City officials in Zhengzhou ordered the lockdown, which will last until November 9, in and around the 200,000-person factory run by Taiwan's Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments. Data suggests infections in the city have tripled this week, to around 360 cases, prompting the strict lockdown response that echoe's Beijing's 'zero Covid' policies.
Foxconn said it would keep the plant operating as part of a 'closed loop' strategy -- where workers remain on premises until the lockdown order expires -- but may struggle to maintain production levels as workers left the compound earlier this week in advance of the lockdown orders.
Reuters reported Monday that November production in Zhengzhou could fall by as much as 30%, but added the Foxconn was working on plans for a boost in output at its Shenzen-based factory to mitigate the slump now underway.
Apple shares were marked 0.84% lower in early Wednesday trading to change hands at $149.39 each.
Apple CEO Tim Cook said last week that iPhone demand has remained healthy, but noted that supply constraints for both the 14 Pro and the 14 Pro Max continued to persist heading into the key holiday season.
Last week, Apple said iPhone revenues rose 9.6% from last year to $42.62 billion over the three months ending in September, missing the $43.2 billion Street forecast. Overall revenues, however, rose 2% from last year to an all-time high of $90.15 billion, helping Apple to a better-than-expected four quarter earnings tally of $1.29 per share.
"We did better than we anticipated, in spite of the fact that foreign exchange was a significant negative for us," CFO Luca Maestri said, noting that December quarter sales would suffer a a 10 percentage point year-on-year impact from the surging U.S. dollar.
The world's biggest tech company also said holiday quarter revenues would slow from September levels, citing in part a 10 percentage point year-on-year impact from the surging U.S. dollar, which is trading near 20-year highs against its global peers.
