Apple faces up to a 10% hit in iPhone production due to protests at a key factory in China, posing a near-term challenge for the stock as the company tries to meet firm demand for its mobile phones, according to a report.
Ahead of the opening bell, Apple shares were down 2%. As protests against China's zero-COVID policy have increased, Apple faces a shortfall of nearly 6 million iPhone Pros this year, according to a report. A person was cited in the report.
Hundreds of workers clashed with security guards at the largest Apple production plant in China over strict coronaviruses measures. The factory is run by the company that makes the iPhone.
"We estimate that Apple now has significant iPhone shortages that could take off roughly at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China," wrote analyst Dan Ives in a note.
"In many Apple stores we are seeing major shortages of up to 40% of typical inventory heading into December with online channels pushing deliveries into early January in many cases depending on model/storage/color."
Apple lowered its production forecast because of softer demand, according to a report.
Despite a softer macroeconomic backdrop, the demand story is the same as before, with robust demand outstrips supply by 3:1 heading into the holiday season.
"Now it's the painful waiting game to see what ramping production looks like over the next week for Apple to ease some iPhone shortages that are building around the world," he wrote. Although these brutal supply shortages in the near term remain a clear overhang for the stock to navigate, our bullish thesis on Apple is demand driven which is very firm.
The S&P 500 has lost more than Apple's share price. Apple is the most heavily weighted stock on the index, accounting for more than 10% of the total.
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