COVID-19

Coronavirus disrupts Apple’s supply chains

Mitchell Hartman Feb 10, 2020
Share Now on:
HTML EMBED:
COPY
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
Share Now on:
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

Will the federal government extend the extra COVID-19 unemployment benefits?

It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow said the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.

As states lift restrictions, are people going back to stores and restaurants?

States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.

Will surges in COVID-19 cases mean a return to lockdowns?

In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.

You can find answers to more questions here.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.