Apple Inc. is warning customers they'll have to wait longer to get its latest iPhone models after antivirus restrictions were imposed on a contractor's factory in central China, dampening its sales outlook for the year-end holiday season.
Solid demand for the new iPhones has helped Apple remain a rare bright spot in the global tech sector that has been battered by spending cutbacks due to surging inflation and interest rates.
But the Cupertino, California-based company has now fallen victim to China's rigorous zero-COVID-19 policy, which has already prompted many global firms to shut their stores in China and cut full-year forecasts.
Apple's announcement Sunday gave no details but said the factory operated by Foxconn in the central city of Zhengzhou is "operating at significantly reduced capacity.”
"We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated," the company said.
"Customers will experience longer wait times to receive their new products,” it noted.
Foxconn Technology Group said earlier it imposed antivirus measures on the main factory in Zhengzhou following virus outbreaks. Apple and Foxconn previously hadn't responded to questions about how iPhone production might be affected.
Last week, access to the industrial zone where the factory is located was suspended for one week following a surge in infections in Zhengzhou and the departure of workers from the factory.
The lockdown is expected to cause further disruptions to the plant, which in recent weeks has seen a spate of coronavirus infections and an exodus of workers, some of whom fled the factory on foot.
Production of iPhones could slump by as much as 30% at one of the world's biggest factories in November due to tightening curbs in China, Reuters reported last month reported.
A separate report by Bloomberg News on Monday said Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year, primarily due to softer demand for the lower-end iPhone 14 and 14 Plus models
Foxconn said in a statement that it is revising its outlook for this quarter downward due to the lockdown.
"Foxconn is now working with the government in a concerted effort to stamp out the pandemic and resume production to its full capacity as quickly as possible,” the company said Monday.
It also said that the provincial government has said it will "fully support” Foxconn in managing the plant's pandemic prevention and operation situation.
In a post on the Zhengzhou plant's WeChat social media account Sunday, the company said a "closed loop” system would restrict its employees’ travel between their dormitories and the factory area to manage risks of COVID-19 transmission.
The last quarter of the year is typically a busy season for companies like Foxconn as they ramp up production ahead of the end-of-year holiday rush.
"We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker,” Apple said.
