Two per head: Apple caps iPhone sales as supply chains break

Although Chinese factories have resumed operations, Apple’s suppliers in other countries face virus-related disruptions.

A fresh round of Apple's supplier factories have been closed in Malaysia, where the government announced a two-week restriction of movement effective March 18 [File: Qilai Shen/Bloomberg]
A fresh round of Apple's supplier factories have been closed in Malaysia, where the government announced a two-week restriction of movement effective March 18 [File: Qilai Shen/Bloomberg]

Apple Inc is limiting customer purchases of iPhones as it struggles to resume full production in the midst of the coronavirus pandemic, even after launching a new iPad Pro and two new Macs this week.

Checks on the phone maker’s website showed that online stores in many countries including the United States and China limited customers to a maximum of two handsets per person.

The purchase caps come just after the hardware maker closed all of its brick-and-mortar stores outside China, as the coronavirus spreads globally and forces lockdowns and limitations on public movement to contain it

Checks on Apple’s website reveal that in numerous countries, a drop-down menu prevents customers from buying more than two of the same model iPhone, across all models. The last time it did so was in 2007, when the iPhone was first introduced, to stop people from reselling them.

In mainland China, Hong Kong, and Taiwan, and Singapore, a message appears above iPhone listings informing customers that purchases will be limited to two devices per order.

Apple declined to comment.

The purchase limits come as Apple braces for a blow due to the coronavirus’ effect on sales, both due to supply chain disruptions and weak demand.

One new product unveiled this week suggests there is a strain on Apple’s supply chain, but also shows the company can still mass-produce gadgets given enough time. The keyboard accessory for the iPad Pro was announced Wednesday but goes on sale in May, an unusual delay.

As the illness swept China, Apple closed all of its brick-and-mortar retail outlets in the country, only reopening all of them by March 13. Foxconn, its most important manufacturing partner, temporarily halted operations, though founder Terry Gou has said production has now returned to normal.

In February, Apple CEO Tim Cook wrote a letter warning investors the company would unlikely meet its initial revenue projections for the calendar Q1-earnings guidance due to the virus. He said on February 28 that production issues would be a “temporary condition”.

Now, while China’s factories have resumed operations, Apple and other hardware companies face weakening demand as the countries around the world shutter retail stores and enforce social distancing.

A fresh round of supplier factories was closed in Malaysia and the virus continued to disrupt operations in many other countries.

“Even as China comes back on line, we are beginning to wonder if Covid-19 will impact other supply oriented geographies,” Brad Gastwirth, chief technology strategist at Wedbush Securities, wrote in a recent note to investors. “While China is improving, the supply chain for the electronics industry may yet see substantial disruptions.”

The coronavirus, which originated in China in late December, has since spread to 178 countries, infecting more than 240,000 and killing about 10,000 globally.

On March 13, Apple announced that all of its Apple Stores outside of China would shut down to fight the spread of the virus.

According to Nicole Peng, who tracks the smartphone sector at research firm Canalys, Apple is likely limiting online orders to prevent scalpers from stockpiling devices and reselling them on the grey market.

“This happened in the past in Asia when there is a new iPhone launch and scalpers saw an opportunity to sell to mainland China, where the new phones were harder to buy at the time,” she said.

“Now that stores all over the world are closed, online scalpers see a similar opportunity.”

Source : News Agencies

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