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:
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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

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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