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Apple Says China Output Resuming But Chip Shortage Weighs

Luca Maestri, the tech company’s financial chief, told analysts that supply-chain issues would hurt sales in the quarter by $4 billion to $8 billion

Tech giant Apple has put plans to use memory chips from China's Yangtze Memory Technologies Co (YMTC) in its products on hold, Nikkei reported on Monday
Apple had planned to start using state-funded YMTC's NAND flash memory chips this year for iPhones sold in the Chinese market, but that plan has been put on hold, sources say. Photo: Reuters.


Production problems for Apple in China due to Covid-19 were easing but semiconductor shortages remained a key issue, chief executive Tim Cook said on Thursday.

He said supply disruptions were focused on a corridor in Shanghai, but the pandemic was also affecting demand in China.

Cook said that almost all of the Chinese factories doing final assembly of Apple products had restarted after pandemic-related shutdowns, but the company is not forecasting when a chip shortage would end.

Apple on Thursday forecast bigger problems as Covid-19 lockdowns snarl production and demand in China, the war in Ukraine dents sales and growth slows in services, which the iPhone maker sees as its engine for expansion.

Shares were down 2.1% after executives laid out their glum outlook on a conference call. The news outweighed strong results, including record profit and sales, for Apple’s fiscal second quarter, which ended in March.

Luca Maestri, chief financial officer, warned in an interview that the war in Ukraine, which led Apple to stop sales in Russia, would leave a bigger dent on sales in the fiscal third quarter.

He told analysts on the call that supply-chain issues would hurt sales in the quarter by $4 billion to $8 billion, “substantially larger” than the hit in the second quarter.

At least one analyst said Maestri’s outlook lacked clarity on the situation in China.

“We were all looking for just better guidance on what is really going on over there … and that didn’t come out,” said Louis Navellier, chief investment officer for Navellier & Associates.


  • Reuters, with additional editing by George Russell



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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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