Apple and Tesla: Tech shares tumble amid supply issues
Apple and Tesla stocks have tumbled over growing concerns about delays in their production lines in China.
Apple shares hit their lowest point since June 2021. Tesla’s stock has dropped 73% from a record high in November 2021.
Companies have struggled to keep production going in China due to Covid restrictions and weeks of lockdowns.
Now they are facing a staffing crunch as China battles a Covid wave after lifting years of restrictions.
China announced that it will lift its strict quarantine rules for travelers on 8 January, a positive sign for many investors who are seeing ease in supply chain movement in 2023.
But global investors are also being cautious ahead of additional interest rate hikes, a global economic slowdown and the ongoing war in Ukraine.
Given the spike in Covid cases in key manufacturing hubs, analysts say production will take time to ramp up once again.
“Factories are going to experience labor shortages for at least 4-6 weeks as the wave passes through their production regions, and of course, most migrant workers will go back to their home villages for the Lunar New Year at the end of January,” says Simon Baptist, chief economist at The Economist Intelligence Unit.
“Production looks unlikely to be back to normal in China until late February.”
Production delays hit Apple supplier Foxconn earlier this year following unrest at its Zhangzhou plant known as “iPhone City.” The company said its revenue in November was down 11% compared with the same month in 2021.
This week, media reports said Tesla’s Shanghai manufacturing plant had cut production as Covid infections rose in China. The company declined to comment.
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