Here’s how much Apple’s supply chain depends on Shanghai
Apple officially opened 54th store in Greater China’s Wuhan, in May. In April, Apple warned that disruptions in supply chains caused by China’s Covid controls could impact sales of the current quarter. This was in addition to the $4 billion-$8 billion warning.
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BEIJING — Apple’sCredit Suisse analysts stated that the supply chain is more likely to recover from shocks like China’s recent Covid Controls than Android.
Shanghai, a port city in a high-end manufacturing region, began to reopen on June 1Two months had passed without any movement to contain a flurry of Covid cases. To stop the spread of Covid, nearby cities suspended their business occasionally.
Credit Suisse analyst Edmond Huang said Monday that overall production could slowly resume to normal in June/July. This would provide a better outlook for Apple’s supply chain than Android. However, semiconductor would face more demand than supply.
“Our checks indicated that the iPhone 14 build schedule“The overall production order will not change, however initial production might be lower due to certain delays in model production or parts/chip shortages,” said the report. We expect that the total production order for new models will remain the same as last year, but it is possible that the final production volume could vary due to disruptions in supply.
Apple didn’t immediately reply to CNBC’s request for comment. Around 19% of sales come from Greater China (including Hong Kong).
Foxconn was the iPhone supplier last week. the impact of China’s Covid controls wasn’t as bad as expected,However, the outlook for full-year results was much better than expected.
Foxconn (also known as Hon Hai) stated that operation was normal in some areas of production in China. The company owns more than 30 factories. Foxconn indicated that, as the Covid situation likely to continue, it plans to enhance its ability to operate in a bubble.
China’s local authorities have granted manufacturers permission to work in Covid restricted areas provided that workers are not on-site. But, companies claim that truck transport restrictions prevent them from transporting parts between customers and factories.
“We think Apple’s supply chain is more flexible than Android. That’s key [Apple]Bank of America analysts in April wrote that Hon Hai is an assembly plant with a more diverse capacity allocation.
Only 5% of Hon Hai’s potential is found in Shanghai’s eastern region and in nearby Jiangsu provincial, while 10%-20% are in Shenzhen and Hong Kong’s Greater Bay Area. Analysts also noted additional capacity in China and overseas.
Foxconn did not immediately reply to CNBC’s request for comment.
According to the Bank of America report, however, 82% of the Android production capacities are located in the Greater Bay Area or east China. This includes Shanghai and Suzhou, Jiangsu.
Android is an open source mobile operating system that Google developed. It is the foundation for many Chinese smartphone brands, such as Oppo. Xiaomi.
Both the Bank of America analysts and Credit Suisse analysts stated that the bigger problem for Android suppliers was their dependence on China and the falling demand for phones in the country.
China’s smartphone sales fell by 18% from last year, compared with 11% worldwide. according to Canalys,The report noted that China’s market performance has been below average for almost three years.
Apple maintained 17% growth year-on-year in mainland China shipment shipments during the quarter. However, brands such as Oppo or Vivo with a larger market share experienced shipments drop by 44% and 34% respectively, Canalys reported. Honor, which is a Huawei spinoff, saw its shipments increase by three times in the first quarter, up from last year’s low base.
Toby Zhu, Canalys analyst said that the Omicron COVID-19 strain and tight lockdowns in large cities in February cast a shadow on the consumer market. This is despite the fact that it has still not recovered from the last year’s weaknesses. Vendors must be more careful with stock allocation in response to sudden closures of retail stores and delays in logistics. This will undoubtedly impact sell-in.
— CNBC’s Michael Bloom contributed to this report.