factories closed
Corona outbreak in China costs Apple billions
4/29/2022 7:43 am
Factory closures and lower demand: The corona outbreak in China is also having a negative impact on Apple. The effects of the Ukraine war make matters worse.
The corona outbreak in China is costing the US technology group Apple dearly. The company said its April-June sales could be $4 billion to $8 billion lower than previously forecast due to factory closures and lower demand. The suspension of sales in Russia in response to the invasion of Ukraine is also hampering growth.
In electronic trading after the market closed, Apple shares lost around three percent. There were already signs of a slowdown in the past quarter. Between January and March, revenue was up 9 percent to $97.2 billion – the first quarter since September 2020 in which Apple didn’t grow double digits. The reasons were, among other things, problems in the supply chain and the special effects caused by the corona pandemic in the previous quarters.
iPhone sales, which account for more than half of the Californian’s total sales, grew just 5.4 percent year-on-year. In Asia (excluding Japan and China), Apple even recorded a decline. However, profit rose 5.8 percent to $25 billion, beating investors’ expectations.
However, Apple is also concerned about new regulatory hurdles. At the end of March, the EU agreed on new rules which, among other things, provide for free choice of app store. Similar rules have come into force in South Korea. Since the services business was one of Apple’s strongest growth drivers with 17 percent in the last quarter, this is a blow to the company, which has so far forced developers to use its app store exclusively and, according to developers, demands high commissions for this.