Consumer Products

What Happens to Apple When China iPhone Sales Plunge?

Apple has two problems in China. The first is that the COVID-19 triggered a lockdown of the area in and around Shanghai, one of the world’s largest cities. That has and will curtail smartphone and computer demand. The other problem is that some of the same locked-down areas are home to factories that produce iPhone components.

Piper Sandler analyst Harsh Kumar says the Chinese lockdown will have little effect on Apple. He is wrong. iPhone assembly company Pegatron is shuttered. So are some plants of huge iPhone supplier Foxconn. Even an interruption of a few days can affect supply by hundreds of thousands of units. And the lockdown is not over. 9to5 Mac summarized the problem: “The latest COVID-19 lockdown measures in China have seen Apple production halted at three key Chinese suppliers. One of these in particular could significantly hit iPhone availability.” Its opinion is that the Pegatron problem is severe.

The lack of iPhone buyers across a part of China that has tens of millions of people is the most severe challenge to Apple. According to Counterpoint Research, Apple had 23% of the smartphone market in China in the final quarter of 2021.

Compared to the balance of the stock market, particularly among tech companies, Apple’s shares continue to outperform. Year to date, they are off 5%. However, the Nasdaq is down by twice that much.

The question about the value of Apple’s shares currently has little to do with things that are obvious. It has the most valuable brand in the world, and it has extraordinary consumer loyalty. It has remarkably inventive products, and it has the best closed system of hardware and software in the world. For now, those things are less important than Apple’s crippling problems in China.

Sponsored: Find a Qualified Financial Advisor:

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.