Apple Inc.’s decision comes after reports that China’s iPhone production capacity is improving, even as the country faces rising infection rates as it reopens from COVID-19 lockdowns. Stocks rose after falling for four straight days on Thursday.
Shares were up more than 3% in Thursday afternoon trading. The stock has fallen 7% overall, down 26.9% year-to-date and is set to be Apple’s worst year since 2008. S&P 500 SPX,
fell 20.6% in 2022, while the Dow Jones Industrial Average DJIA
It’s down 9.5% counting Apple as a component.
It rose after Thursday’s Wall Street Journal article suggested that wait times for Apple’s premium iPhone Pro models would be cut and production capacity restored at Foxconn HNHPF.
A factory in Zhengzhou, the main producer of these phones, based on reports from supply chain officials and analysts. It relies on certain iPhone products (such as the iPhone 14 Pro Max).
The recovery in production follows the COVID-19 outbreak that led to a lockdown at its factory in October, as well as severe travel restrictions and worker protests that have hampered production, the WSJ said. Foxconn lifted its lockdown earlier this month. But as the Chinese government ends most of its stringent COVID restrictions, infection rates are soaring, threatening the health of factory workers.
“Supply of iPhone Pro models continues to slowly improve, lead times are further relaxed in China, and the majority of SKUs are now available for store pickup in all regions, including China, for the first time since the product launch. ,” said a JP Morgan analyst. Samik Chatterjee said in a note Tuesday:
“Pro model lead times are now tracking in line with lead times seen before COVID in Zhengzhou, China, suggesting improved supply.
We are slowly inching towards parity with demand,” the memo continued.
The WSJ, citing other analysts, said divisions at the Zhengzhou factory that makes iPhones are running at about 70% capacity. To attract more employees, Foxconn has offered incentives to some employees who are willing to work on the production line until March 20, he said.
Apple’s iPhone sales fell short of expectations in its most recent quarterly results. Analysts have cast doubt on demand for the new iPhone 14 models following reports of a planned withdrawal of production.