Apple has announced that it is temporarily closing its 42 stores in mainland China, as the Novel Coronavirus (2019-nCoV) spreads. As of 2 February 2020, there are 14,411 confirmed cases in China with 304 deaths. Outside of China, confirmed cases top 146 across 23 countries, with the first death reported in the Philippines.
The Cupertino company said it was closing stores, corporate offices and contact centres in China until 9 February “out of an abundance of caution and based on the latest advice from leading health experts.”
“Our thoughts are with the people most immediately affected by the coronavirus and with those working around the clock to study and contain it,” the company said in an official statement.
Apple’s online store, however, will remain open for business.
An industry analyst from WedBush Securities, Daniel Ives, predicted the store closures will have a “negligible” impact on Apple. This is largely because consumers in mainland China will still be able to buy iPhone and other Apple product through online channels.
In a worst-case scenario, if the shutdown extends throughout the month of February, the analyst believes it would only lower Apple’s annual smartphone sales in the region by about three percent.
Apple no longer discloses iPhone unit sales. That said, the company generated nearly USD44 million in revenue from China alone in its last fiscal year.
Apple CEO Tim Cook said that the company’s contractors in China have been forced to delay reopening factories that closed for the Lunar New Year holiday.
The company is looking for ways to minimise supply disruptions seeing that some of its suppliers are based in Hubei, the Chinese province that’s at the centre of the virus outbreak. The province has been under lockdown for more than a week.
On Sunday, analyst Ming-Chi Kuo of TF International Securities said his firm is cutting iPhone shipment forecast for the first quarter of the year by 10 percent due to the novel coronavirus.
Kuo predicts iPhone shipments will total 36-40 million units in 1Q20. He estimates Apple shipped around 38 million iPhones in the first quarter of last year.
Apple reported stunning numbers in its quarterly earnings call last Tuesday, where it smashed iPhone sales expectations, spearheaded by brisk sales of the iPhone 11. iPhone revenues topped USD 55.96 billion versus USD51.92 billion forecasted by analysts.
Tim Cook warned that the virus outbreak might affect sales for the next quarter.
Header photo: AP Photo | Ng Han Guan
