Apple imposes iPhone purchase curbs as supply chain woes bite

Apple Inc's decision to limit iPhone purchases from its online stores in China is an indication of the supply chain constraints being faced by the US tech giant, as the novel coronavirus outbreak has disrupted normal operations at upstream suppliers and electronic component manufacturers, experts said.

Apple said on Friday that each Chinese customer can only buy at the most two units of each iPhone model from its online store. The restriction applies to the iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max, iPhone XR, iPhone 8 and iPhone 8 Plus.

The move came after the Cupertino, California-based firm announced last week it will close all of its stores outside of China until March 27 to reduce the risk of infections.

The purchase restrictions are a visible effect of how the US firm is struggling to maintain normal operations and keep the supply chain running. Foxconn Technology Group, the world's largest contract electronics manufacturer and a key Apple supplier, has also been facing staffing difficulties due to the epidemic, said a report issued last week by Depthpaper, which is affiliated to China Business Journal.

Foxconn, however, refuted the claims and said its employee recruitment process has been running smoothly. "Because of this, our facilities on the Chinese mainland have returned to full seasonal capacity much earlier than previously projected."

Foxconn, formally known as Hon Hai Precision Industry Co, has major production bases in Shenzhen, Guangdong province, and Zhengzhou, Henan province.

"We continue to place a high priority on the welfare of all our employees and apply all recommended health and hygiene practices to all aspects of our operations, including the use of nucleic acid tests and chest X-rays when required. We have resumed production at all our campuses on the Chinese mainland," it said.

"It takes more time for the companies along the industrial chain to restore production capacities due to COVID-19 outbreak," said Roger Sheng, vice-president of research at global consultancy Gartner Inc, adding that Apple decided to limit bulk online purchases of iPhones, in consideration of current tight supply for the products.

"Moreover, the production of some electronic components makers is yet to return to the normal level, especially the key optical parts that are manufactured by South Korean companies, as some of the factories have been shut down due to new infections in the country," Sheng said.

Jia Mo, a research analyst with technology consultancy Canalys, believes that the tight supply situation will be alleviated, given that Foxconn's factories have resumed production.

He added that with the virus spreading worldwide, Apple's physical stores outside of China are closed. "It is more noteworthy to see how the company meets the demand challenges during the epidemic."

According to a recent forecast from market research company IDC, the coronavirus epidemic will most likely have a negative impact on the global smartphone market. The epidemic will slow down smartphone shipments, slated to fall by 10.6 percent on a yearly basis during the first half of this year.

Ming-Chi Kuo, an analyst from TF International Securities, has lowered his iPhone shipment forecast by 10 percent to 36 million units to 40 million units in the first quarter of this year, noting that the epidemic is affecting iPhone supply on the Chinese mainland.

Pei Pei in Shenzhen contributed to this story.