- Apple’s stock dropped on November 28 due to news of production issues at the Foxconn factory in Zhengzhou, China.
- The company declined to comment on the Bloomberg report that there would be a production shortage of six million iPhone Pro models.
- Uncertainty remains about whether Apple can return to full capacity at the Foxconn factory as unrest continues to grow in China.
While many parts of the world have dropped pandemic-related restrictions, China is still experiencing challenges in this area. The situation in China has turned violent, with protests across the entire country in response to lockdowns.
These protests and other lockdown-related issues have led to production issues at the Foxconn factory in Zhengzhou, China, where Apple produces iPhones.
Apple has been going through some difficulties when it comes to the production of iPhones. Reports state that there might be a shortfall of six million iPhone Pro units due to ongoing issues. This news caused Apple’s stock to drop as there are concerns about reduced earnings.
Let's look at the situation with Apple in China and what this means for Apple’s stock.
Production delays of new iPhones in China
Foxconn, a Chinese iPhone supplier, has been experiencing production issues since workers have been in a dispute with management for overdue payments. This has caused slowdowns in production.
The COVID-19 lockdowns in the area have also impacted workers and production. Foxconn is located in Zhengzhou, which has been locked down as the country aims for a zero-COVID policy.
Analysts predict that these production issues could lead to a decline in output of anywhere from 5% to 10%, which would be terrible news around this time of the year. Bloomberg reported that the production issues could lead to a shortage of up to six million iPhone Pro units.
Even though Apple declined to comment on this report, the news was enough to cause the stock to drop.
What makes the situation worse is that some of the reports coming out of China are horrible, with stories of employees at Foxconn protesting food shortages, payment issues, and complaints over how the company handles COVID-19 outbreaks.
There were reports that workers started smashing cameras and windows during the protests. These violent protests could continue if the situation isn't immediately resolved within the country, leading to increased uncertainty about how Apple will meet demand.
Plus, there are worries that the demand for the new premium iPhone product could drop since consumers may not want to wait for an undetermined period of time to get their hands on the new gadget.
When will the production delays be resolved?
The one troubling aspect of Apple's production issues in China is that it doesn't look like there's a resolution in sight.
While the reports vary about the severity of the infections, troubling news has come out about the violent protests against the lockdowns. The shocking and unprecedented protests have impacted the entire country.