Even the world’s most valuable company isn’t immune to the disruptive force of a global health crisis. Apple published a press release on Monday, saying that it doesn’t expect to meet the revenue guidance for the ongoing quarter that was issued on January 28 due to the negative effects of the coronavirus outbreak.
According to the press release, the COVID-19 pandemic is hitting Apple’s business in two major ways, affecting both the demand and the supply side. On the supply side, Apple says that the production ramp-up after reopening iPhone manufacturing facilities following Chinese New Year is going slower than expected, resulting in worldwide iPhone supply constraints. On the demand side, the illness’ adverse effect on Apple’s bottom line will likely be significant, albeit more limited geographically. All of the company's retail stores across the country were at least temporarily closed due to the virus, and those that have reopened are seeing very limited customer traffic, hence sales.
As the following chart shows, China is a very important market for Apple, despite the fact that the company’s Greater China sales dropped to a five-year low in 2019. After entering the Chinese smartphone market in 2010, Apple’s sales in the region grew more than 20-fold within five years, peaking at $58.7 billion in 2015. That year, China accounted for 25 percent of Apple’s total revenue. By 2019, that number had declined to 17 percent and might drop further depending on how quickly the COVID crisis recedes.