Trendforce, a supply chain analytics firm, projected in a report published Tuesday that shipments of smartwatches and smartphones, among other products and components, could see double-digit drops this quarter owing to COVID-19-related disruptions. Apple shares closed 1.83% lower on Tuesday to $319.00 after it warned investors that its first quarter revenue will fall short of its initial guidance.
According to Trendforce, labor shortages and travel restrictions have impacted production of a wide range of products and components, including computer panels, fiber optics, LED components, and consumer devices such as phones, watches, smart speakers and laptops. Some components, such as memory products, are unaffected either because their production is either highly automated or geographically dispersed.
Using data through Feb. 14, Trendforce forecast that for the first quarter, smartphone production will see the lowest output of any quarter within the past five years. Smartphone production is poised to drop 10.4% from the firm's prior forecasts; smartwatch shipments will fall 16%, notebooks will drop 12.3% and smart speakers 12.1%. (The smartphone figures refer to the number produced, while all other figures refer to device shipments; you can read the full report here.)
For its part, Apple didn't issue an updated revenue target for the first quarter beyond warning investors that it would fall below the original target of $63 billion to $67 billion.
The coronavirus outbreak has killed more than 2000 people and sickened tens of thousands more, according to updated figures released by China's National Health Commission released early Wednesday local time.
"The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, and this disruption to our business is only temporary. Our first priority — now and always — is the health and safety of our employees, supply chain partners, customers and the communities in which we operate," Apple said in its revenue warning to investors.
It's difficult to predict at this point what the total revenue impact will be for companies like Apple with the public health crisis still ongoing, according to Romeo Alvarez, analyst at William O'Neil + Co. But we'll learn more soon, as suppliers with exposure to Apple -- such as Cirrus Logic (CRUS) , Universal Display (OLED) and others -- report their latest results and forecasts.
"Over the coming weeks, I expect to see more revenue revisions from these companies," Alvarez said.