Apple’s Tim Cook: Our Factories in China Are ‘Getting Back to Normal’

Apple’s CEO also expressed optimism that China is getting the coronavirus outbreak under control.
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Apple  (AAPL) - Get Report CEO Tim Cook told Fox Business Network on Thursday that he’s optimistic that China has gotten the coronavirus outbreak under control, and said that its factories in China that were shut down were getting closer to normal production.

“When you look at the [iPhone] parts that are done in China, we have reopened factories so the factories are working through the conditions to open, they’re reopening,” Cook told Susan Li in an interview in Birmingham, Alabama. “They’re also in ramp. So I sort of I think of this as the third phase in getting back to normal, and we’re in phase three of the ramp mode.”

On the broader issue of how the outbreak is being handled in China, Cook said that “it feels to me that China is getting the coronavirus under control. You look at the numbers coming down day by day by day so I’m very optimistic there.”

Most of Apple’s production of iPhones and other products occurs in China, and the country is also an important consumer market for China, with around 15% of its global revenues coming from the region.

Apple warned on Feb. 17 that it would not meet previously-supplied guidance on revenues for the current quarter because of the impact of the coronavirus on its supply chain in China.

On Thursday, Cook did not say definitively whether the coronavirus-related disruptions would be contained to the current quarter.

"I don’t know the answer to that yet...We’re still in February and you know, there’s a reason for optimism but we’ll see," Cook said. 

Asked by Li whether the effects of the outbreak could trigger a supply chain shift outside of China, and to lower-cost countries such as Vietnam or Cambodia, Cook said that Apple's supply chain is built for to handle unpredictable events like "earthquakes, tornados, fires, floods, tsunamis, SARS."

"We’re not really fixated on cost only," he added. "Cost is one factor, clearly. But we’re also...fixated on quality. And we’re focused on time to market, and the speed, and the depth of engineering in the different places. And so somebody would have to meet all of those in order for us to do something."

Shares have been hit hard since Apple's revenue warning, suffering a close to 20% decline as worries about the extent of the outbreak and its impact on world economies have hammered the overall market as well. On Friday afternoon, shares of Apple were trading down 1.5% to $269.30.

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