Apple shares witness record slump amid iPhone shortage

Stocks
A display of iPhone 14 smartphones at the Apple Inc. Regent Street store in London, UK, on Monday, Nov. 7, 2022. Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year, according to people familiar with its plans.

A display of iPhone 14 smartphones at the Apple Inc. Regent Street store in London, UK, on Monday, Nov. 7, 2022. Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year, according to people familiar with its plans.

Shares of tech giant Apple Inc slumped to their lowest level since June 2021 yesterday. Major concerns regarding the supply of iPhones in the holiday period has been cited as one of the key reasons for a sell-off of tech stocks.

According to a report by the business news website MarketWatch, shares of Apple Inc fell by 1.7% in afternoon trading. The stock was headed for a price which would have been its lowest for the year.

Also Read: iPhone 14 Pro and Pro Max users report display issues; Apple promises a fix soon

The tech giant’s stock has fallen by 12.4% in December 2022, which happens to be its weakest monthly performance since it fell by 12.8% in May 2019. Apple’s stock has seen bad days in the past too such as the historic 56.9% plunge it took in 2008’s financial crisis. The stock fell by 27% this year.

Earlier this year the iPhone maker had to deal with chaos as its assembler Foxconn’s factory located in Zhengzhou, China witnessed an outbreak of Covid which severely affected operations in the month of October.

As China changes its Covid policy, lifting curbs and covid preventive restrictions, the risk of worker shortages now looms over assembly factories in China.

Also Read: Apple may postpone the launch of iPhone SE 4 till 2024: Report

Bindiya Vakil the chief executive of Resilinc, told the Financial Times “We should be seeing a lot of operations get impacted by absenteeism, not just at factories, but warehouse, distribution, logistic and transportation facilities as well”.

According to a report by the Financial Times one fifth of Apple’s revenues come from their China based sales and more than 90% of Apple’s phones are assembled there. Analysts predict that apart from the production and supply side crisis which Apple faces, the tech giant may also face demand based issues.

Also Read: Apple’s iPhone needs a shake-up, and a new law might help

Horace Dediu an independent analyst at Asymco a consultancy in an interview to Financial Times said, “though the rest of the world saw demand rise during lockdowns, it was due to work from home and stimulus.”

“With low immunity and minimal safety nets, Chinese consumers could hunker down and avoid big purchases next year,” Dediu added.