Apple iPhone shipments take a big hit from Chinese lockdowns

Yahoo Finance's Allie Garfinkle discusses how China lockdowns have impacted Apple production.

Video transcript

RACHELLE AKUFFO: Well, another company dealing with its share of complications from China's COVID measures is, of course, Apple. Now the issue stemmed not just from a manufacturing perspective, but demand. China makes up nearly a quarter of the group's global sales. Yahoo Finance's Allie Garfinkle has that story for us. Hey, Allie.

ALLIE GARFINKLE: Hi, Rachelle. So it was in late November that violent protests first erupted at that key Foxconn factory in China. This was major for two big reasons. The first is that this factory wasn't-- is producing iPhones on a massive scale. And like we've talked about, it was a rare scene of public violent dissent in China. The protests, of course, came after weeks of strict COVID lockdown procedures and years of China's zero-COVID policy. It all really came to a head, honestly, with Apple.

And now China's manufacturing relationship with the company is now inextricably connected to the government's decision to pull back on its COVID policies. We saw that Foxconn letter come in from Terry Gross, saying this is going to affect the global supply chain. However, the damage maybe has already been done, right? There are some numbers out there that are pretty jarring. Apple is down about 6 million iPhones as a result of these protests.

And we're starting to see that the company has reaffirmed its plans to diversify its manufacturing away from China to India. This was something that has been talked about for some time. But there's definitely a sense that it's been sped up here. By 2025, Apple could make 25% of all its iPhones in China. I don't know if it would have accelerated the way it has, certainly, Rachelle, if we hadn't seen these protests.

The bottom line here from my end is that this period in China that China is now coming out of maybe has had permanent, or at least, lasting effect on the company's manufacturing relationship with Apple. Bottom line, China's strict COVID policy, I think it caused the human link in Apple's supply chain maybe not to break, but certainly to bend.