Apple said the spread of the coronavirus in China has disrupted iPhone manufacturing and driven down sales in the country. As a result, the tech giant said it now expects to undershoot the revenue guidance it previously provided, of between $63.0 billion and $67.0 billion in its fiscal 2020 second quarter (which ends March 28).
“Work is starting to resume around [China], but we are experiencing a slower return to normal conditions than we had anticipated,” Apple said in a statement on Monday.
According to Apple, its iPhone manufacturing partner sites are located outside of China’s Hubei province and all of those facilities have now reopened. However, “they are ramping up more slowly than we had anticipated,” the company said. “These iPhone supply shortages will temporarily affect revenues worldwide.”
The second factor for Apple’s revenue-shortfall warning for the March 2020 quarter is that that demand for Apple products in China has declined after all of its retail stores in China (and many of its partners) were closed because of the health crisis. Additionally, stores that are open have been operating “at reduced hours and with very low customer traffic,” Apple said. “We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.” The company said its corporate offices and contact centers in China are open.
Outside of China, Apple said customer demand across products and services has been “strong to date and in line with our expectations.”