Apple's suppliers are slowly returning to production as normal © Alex Tai/SOPA Images/LightRocket/Getty Images
Apple's suppliers are slowly returning to production as normal © Alex Tai/SOPA Images/LightRocket/Getty Images

Apple warns of iPhone shortages

18 February 2020

Apple has become the latest company to suffer the impact of coronavirus, warning its iPhone supplies will be “constrained” as fewer than expected Chinese employees return to work

The tech giant said its revenues would now fall short of forecasts as both production and sales had been hit following an extended break for the Lunar New Year to deal with the outbreak of coronavirus. 

In a statement, Apple said while component production is starting to resume around China, it is still “experiencing a slower return to normal conditions” than initially anticipated. 

“Worldwide iPhone supply will be temporarily constrained” while “supply shortages will temporarily affect revenues worldwide,” it said. 

“While our iPhone manufacturing partner sites are located outside the Hubei province, they are ramping up more slowly than we had anticipated,” it continued. 

The update follows Apple CEO, Tim Cook, telling investors in January that it was working on mitigation plans to make up for production losses. 

Meanwhile, earlier this month, Foxconn - one of Apple’s key manufacturers - announced it would be switching part of its production line to manufacturing surgical masks to meet growing consumer demand.

Although Foxconn received the green light to resume activities at two of its major plants in Zhengzhou and Shenzhen last week, only 10% of its workforce has so-far returned following the extended break, according to Reuters

Apple’s woes come as research firm Dun & Bradstreet revealed more than 5m businesses could be impacted by shutdowns of suppliers in China. 

Researchers found 51,000 companies worldwide have one or more tier one suppliers in the impacted region, while at least 5m have one or more tier two suppliers.

It found the top five major sectors - services, wholesale trade, manufacturing, retail and financial services - account for more than 80% of businesses within impacted provinces.

Milan Vranic, head of contract compliance at accountancy firm HW Fisher said: “It is essential for businesses to take proactive measures and assess the impact the virus is having on their extended enterprise and how they can mitigate the knock-on effects.”

He added: “Leaders should be focused on identifying key suppliers that are most at-risk; making sure the right processes are in place to address disruption. This is a vulnerable time for businesses of all sizes, and they must face this head on to ensure they minimise financial losses associated with any breakdown in their ability to operate.”

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