Coronavirus outbreak may disrupt Apple's iPhone production plans

Apple’s plan to ramp up iPhone production by 10% in the first half of this year may hit a roadblock as the coronavirus outbreak spreads across China, the Nikkei Asian Review reported on Tuesday.

The company has asked its suppliers, many of whom have manufacturing centers in China, to make up to 80 million iPhones in the first half of 2020, the Nikkei reported, citing people familiar with the company’s plans.

Apple has booked orders for up to 65 million of its older iPhones and up to 15 million units of a new cut-price model that it plans to unveil in March, according to the report.

However, the mass production which is due to start in the third week of February might be delayed due to the virus outbreak, the Nikkei reported.

The coronavirus outbreak has so far killed more than 100 people and infected over 4,500 in China, stranded tens of millions during the Lunar New Year holiday and rattled global markets.

Apple’s shares rose about 86% in 2019, outperforming a 29% rise in the S&P 500 index. The stock closed down nearly 3% at $308.95 on Monday as coronavirus fears dragged down high-flying U.S. chip and technology stocks.

Cupertino, California-based Apple, which raked in more than $142 billion in iPhone sales in fiscal 2019, has introduced lower priced smartphone variants to woo budget conscious shoppers and check declining sales of its biggest product category.

Last October, Nikkei reported that Apple asked its suppliers to increase production of iPhone 11 models by up to 8 million units, or about 10%, hinting that demand for the recently launched versions of its flagship phone was picking up.

The iPhone maker is set to report its first-quarter earnings after markets close on Tuesday.

Apple did not respond to a Reuters request for comment.