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Apple demand and supply hit by coronavirus

By Philip Smith

Samsung is poised to benefit from Apple’s woes, having moved its phone production to Vietnam

An Apple store in Beijing closed by the coronavirus API

Apple has said it will miss its March quarter revenue, blaming the coronavirus. It says the outbreak has hit both supply and demand for its products.

On the supply side the bulk of Apple’s manufacturing is undertaken in China. Along with the Taiwanese Foxconn – a major supplier of components for the iPhone – it has seen output hit as the Chinese authorities shut factories to help contain the spread of the virus.

Demand in China is also down as many shops have closed, resulting in a dramatic fall in sales.

Apple shares fell almost 6 per cent this morning.

Even though demand in the rest of the world remained high, without Foxconn’s components there is doubt over Apple’s ability to meet that demand, which would see prices soar.

While Chinese smartphone maker Xiaomi last week also flagged a hit to its March quarter sales another rival, Samsung, could well be a beneficiary. It had previously moved production to Vietnam where half its phones are now made.

Apple’s news was as much a blow to China as it was to consumers and investors in the US company. The Chinese state central bank has already cut interest rates and injected billions of yuan into the economy to help offset fallout from the virus, now officially called Covid-19.

FURTHER READING: Apple stock predictions for 2020 and beyond

FURTHER READING: China says factory activity grew in December

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