The world’s most valuable smartphone company Apple does not expect to meet its quarterly revenue forecast because of the novel coronavirus outbreak in China, which it says has resulted in lower global supply and a fall in demand in one of its biggest markets. The company had earlier estimated that its net sales during the January-December quarter would be between $63 billion to $67 billion. However, Apple did not disclose the extent of the fall they expect.
In a statement issued on Monday, the Cupertino-based tech giant said, “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.” Elaborating further on the reasons for the slump, Apple said, “Worldwide iPhone supply will be temporarily constrained… 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.”
Apple not only sells a large chunk of its gadgets in China, but also outsources certain components and assembles flagship iPhones in the country. A fall in Chinese operations has the potential to hit its supply chain, resulting in a global shortage of the premium smartphones. As for the demand side, Apple said, “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”.
“We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout,” the company added. Outside of China, Apple said that demand for its products remain strong to date and in line with expectations.The contagious disease that has claimed over 1,700 lives so far and led to the complete shutdown of major industrial towns has not only impacted Apple but also forced major smartphone makers such as Huawei, Xiaomi and OnePlus to cut down production and shipments.
According to major industry trackers, the demand for smartphones in China is expected to fall anywhere between 20-30 per cent in the March quarter, while global supply may fall in the high single digits. In India, where Chinese players dominate the market, prices of smartphones are expected to go up because of the shortage in supply of components from neighbouring nations.
Chinese demand to crash 30%
According to major industry trackers, the demand for smartphones in China is expected to fall anywhere between 20-30 per cent in the March quarter, while global supply may fall in the high single digits.