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COVID-19

Coronavirus disrupts Apple’s supply chains

Mitchell Hartman Feb 10, 2020
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Workers assemble electronic components at the Foxconn factory in Shenzhen, China. AFP via Getty Images
COVID-19

Coronavirus disrupts Apple’s supply chains

Mitchell Hartman Feb 10, 2020
Workers assemble electronic components at the Foxconn factory in Shenzhen, China. AFP via Getty Images
HTML EMBED:
COPY

The coronavirus continues its rapid spread in China, as the death toll topped 900 worldwide over the weekend. Both the Chinese government and big corporations there are trying to contain its spread by closing factories and ports, quarantining major population centers and keeping workers from returning to their jobs after the Lunar New Year.

All of this is disrupting supply chains for major consumer goods that are produced in China, like the smartphones that Apple sells in the U.S. and all over the world.

Most of Apple’s top-selling devices are made at contract manufacturer Foxconn’s huge factories in China. Exports come through the port of Wuhan — the epicenter of the epidemic. Foxconn said Sunday it could not make a decision to resume production “until further notice.”

Analysts have warned that Apple’s shipments from China could be down 5% to 10% this quarter. Equity analyst Angelo Zino at CFRA said Apple has tried to shift production to other Asian countries, like India and Vietnam, without much success.

“China just has a very well-established, sophisticated supply chain,” Zino said. “They’ve got the right people there, and a significant amount of demand coming out of China.”

Consumers in the U.S. appear to be paying close attention to the coronavirus. John Leer, an economist at Morning Consult, pointed to a recent survey.

“Thirty-nine percent of respondents said they are less likely to buy Chinese-made goods. It could just fuel the fire of anti-import sentiment,” he said.

Apple’s next new product out of China is expected to be a low-cost iPhone, aimed mostly at developing markets like India.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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