As we suspected, Apple Watch production in Zhengzhou, China’s “Apple City” did not resume on February 9. “Apple assembly partner Foxconn has been told by Chinese authorities it cannot open its production facilities,” appleinsider.com reports, “due to the ‘high risks’ of infection determined after an inspection by public health experts.” Even if Apple Watch production facilities weren’t offline, labor is an issue . . .
According to reuters.com, “In Zhengzhou, about 16,000 people, or less than 10% of the workforce, had returned to Foxconn’s plant as of Monday.”
Apple City open without enough workers, or closed until the coronavirus epidemic loses steam? Either way, it’s clear that Apple’s Chinese supply chain is FUBAR until further notice.
While the mainstream press is focusing on the “concerning” impact of plant closures on the supply of iPhones and AirPods, the same looming calamity applies to the Apple Watch. Wedbush analyst Daniel Ives says that the typical Apple store carries at least five to six weeks of inventory at a given time. Tick, tick, tick.
All of Apple’s Chinese retail stores remain closed “until further notice.” Which means Apple joins the Swiss watch industry watching a major market fall off the face of the Earth. Around 20 percent of Apple’s total worldwide sales go down in the communist dictatorship known as the People’s Republic of China, in fact. That’s less than the Swiss watch industry 50%-of-exports-to-Asia stat, but . . . ouch.
Apple Watch production is offline – with no start in sight. If you want an Apple Watch, I suggest you buy one within the next month. If you’re a Swiss watchmaker, I suggest you hang onto that schadenfreude. Even if the Apple Watch supply dries up for months, the Mother of All Smart Watches will be back and will continue to kick Swiss watch ass.