Apple could see some impact from coronavirus in China, Cook says
Apple has suppliers in the Wuhan area of China and has taken precautions like closing retail stores.
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Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
is immune to the coronavirus sweeping the globe, with suppliers and stores impacted by the deadly disease. CEO
last week said the company has suppliers in China's Wuhan region, where the coronavirus first emerged. The iPhone maker has alternative sources for those components, he said, and it's "working on mitigation plans to make up any expected production loss."
What's less clear is how the coronavirus will impact suppliers in other parts of China, Cook said. The Chinese government extended the New Year holiday break from the end of January to Feb. 10, which will delay the startup of Apple supplier factories, Cook said.
Even if suppliers do get back to work on Monday, the two week halt of operations could mean delays for some devices. Up to 45 million pairs of AirPods could be caught in limbo while manufactures wait on components needed to assemble the wireless earbuds, according to a report Thursday from Nikkei Asian Review.
"The situation is emerging, and we're still gathering lots of data points and monitoring it very closely," Cook said during a call with analysts after the company reported record
on Jan. 28.
Apple factored the possible supplier and retail traffic impact into its revenue guidance for the March quarter, which -- at $63 billion to $67 billion -- is a bigger range than it normally provides. Even with the possible impact, Apple's projection is higher than the $62.45 billion expected by analysts.
The virus since has spread to Europe, Australia, the US and other countries. A special WHO committee declared a public health emergency of international concern on Jan. 30, citing "the potential for the virus to spread to countries with weaker health systems."
China has become one of Apple's most important markets over the past several years. In early 2015, China surpassed the US to become Apple's biggest iPhone market. (The US later regained that status.) Apple's revenue from Greater China rose 3.1% to $13.6 billion in the quarter. It lagged behind the Americas and Europe, but sales in some product areas soared during the period.
Apple saw double-digit growth for its iPhone business in Mainland China in the first quarter, Cook said, a turnaround from sluggishness Apple had experienced in recent quarters. It also had double-digit growth in its services business in China -- which includes its App Store -- and "extremely strong double-digit" growth for its wearables business, which includes the
and AirPods, Cook said.
"In terms of the things that customers are responding to, iPhone 11 is doing particularly well there," he said.
While Apple sells a lot of its
in China, it's also tied to the country in another key way. Apple designs its phones in the US, but the devices -- like many other electronics -- are assembled in China. Many of its employees travel frequently between the region and Apple's Cupertino, California, headquarters, and a slowdown in production in China could mean a shortage of iPhones and other Apple devices across the globe.
"We're closely following the development of the coronavirus," Cook said on Jan. 28. "We're donating to groups that are working to contain the outbreak. We are working closely with our Apple team members and partners in the affected areas, and our thoughts are with all of those affected across the region."
CNET's Jackson Ryan contributed to this report.
Originally published Jan. 28. Updates, Jan. 28: Includes additional comments and background; Feb. 6: Adds more details on impact of coronavirus on Apple.