Apple plans to boost production outside China

According to the Wall Street Journal, Apple Inc. (AAPL.O) has informed several of its contract manufacturers that it wants to boost manufacturing outside of China.

Apple has short-listed India and Vietnam as options, according to the report. Last month, Apple predicted worsening supply issues as China’s COVID-19 lockdowns delayed manufacturing and demand.

According to the article, Apple’s decision is based on China’s tough anti-Covid regulation, among other factors.

Apple Inc. foresees further problems once China’s COVID-related regulations take effect.

Production and demand are stifled by 19 lockdowns, the crisis in Ukraine dampens sales, and service development, which the iPhone maker regards as its engine for growth, stalls.

After executives indicated their pessimism on a conference call, shares were down 2.2 percent in late trade. Apple’s fiscal second quarter profit and sales, which ended in March, were overshadowed by the announcement.

Apple’s Chief Financial Officer Luca Maestri warned in an interview that the situation in Ukraine, which led the company to suspend sales in Russia, will affect sales even more in the fiscal third quarter.

He stated on the conference that supply-chain issues would hurt sales by $4 billion to $8 billion in the third quarter, which would be “much higher” than the damage in the second.

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