Maestri said this was “substantially larger than” the impact in the previous quarter and also warned about the likely knock-on effect of reduced consumer demand in China due to lockdowns. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
According to analysts, strict lockdowns in Shanghai and neighbouring provinces have harmed Apple’s value chain in China, which is emblematic of the country’s global role as a source of labour and assembly. This raises the risk that the US tech giant will accelerate a shift of its operations away from China. While it’s difficult to put a precise figure on the losses caused by disruptions in Apple’s extensive value chain in China, chief financial officer Luca Maestri said on Thursday that Covid-19-related lockdowns and a chip shortage would reduce the company’s revenue by up to US$8 billion in the June quarter.
China’s strict lockdowns in Shanghai and Jiangsu province – key financial and manufacturing centres – since the end of March to tame the highly-infectious Omicron variant of Covid-19, have raised doubts about the country’s position as an integral part of global supply chains for Apple.
Apple’s close links with China have, historically, been underpinned by two main factors. First, the country is an ideal assembly centre for the California-based tech giant, thanks to its advanced infrastructure, skilled labour force and efficient logistics services. Components from Taiwan, South Korea and elsewhere are assembled into iPhones and iPads on factory floors in China for the whole world to buy. Secondly, China itself is the second-largest market for Apple, thanks to the country’s growing middle class, which has become increasingly affluent over the past decade, say analysts.