Apple warns of ‘iPhone supply shortages’ because of coronavirus

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A security guard wearing a protective mask stands guard inside an Apple Inc. store in Shanghai, China, on Saturday, Feb. 15, 2020. China is entering the “most critical time” in its fight to contain the spreading coronavirus, a government official said. Photographer: Qilai Shen/Bloomberg via Getty Images

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(CNN) — Apple warned investors on Monday that the ongoing coronavirus outbreak is hurting its business more than previously expected by limiting how many devices it can make and sell in China.

In an investor update, Apple said it no longer expects to meet the revenue guidance it provided last month for the upcoming March quarter. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said.

Much of Apple’s manufacturing operations are based in China, which has been hardest hit by the coronavirus outbreak. Nearly half the country’s population are living under some form of travel restrictions.

“The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” Apple said. “These iPhone supply shortages will temporarily affect revenues worldwide.”

Apple temporarily closed all of its stores in China. While the company said it is “gradually reopening” stores, those locations have reduced hours and that foot traffic is “very low.”

The company expects the business disruption to be temporary. In general, iPhone sales are surging, up nearly 8% to $56 billion in the last three months of 2019.

Major international companies have closed offices and factories in response to the deadly virus. Some are starting to reopen, but the situation is still far from business as usual.

Huawei, the country’s top smartphone maker, recently reopened its Shenzhen headquarters where it employs about 40,000 people, according to a person familiar with the matter. The person said its decision was in line with local guidelines that authorized businesses to reopen.

But employees returned to a dramatically different environment than the one they left in January. When they clock in each morning, Huawei workers must now provide details about their body temperature and whereabouts for the last two weeks, the person said. There are also temperature checks at office buildings and in parking lots, while face masks and hand sanitizers are dispensed throughout its campus.

Baidu, China’s top search engine provider, said recently that it was “gradually” reopening its offices. But employees who come in “must meet quarantine conditions, and they can only return to work in the campus after approval,” the company said in an internal memo seen by CNN Business.

— CNN Business’ Clare Duffy, Michelle Toh and Danielle Wiener-Bronner contributed to this report.

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