Apple (NASDAQ:AAPL) is limiting bulk purchases of iPhones and other products as it faces supply constraints related to the coronavirus outbreak, per a Reuters Report.
In mainland China, Hong Kong, Taiwan, and Singapore, a message appears above iPhone listings informing customers that purchases will be limited to two devices per order.
Notably, the purchase limits have also been rolled out across the United States, U.K., Canada, Europe and other regions. In most non-Asian regions, the limits won't appear until the checkout process.
Apple’s online store is limiting customers to two units of each iPhone model per person this week. Customers can still buy more than two iPhones in one order but they would have to be different models.
There is a limit of two iPhone 11 Pro, iPhone 11 Pro Max, iPhone 11, iPhone XR, iPhone 8, and iPhone 8 Plus models per customer. Other Apple devices such as the new MacBook Air and the Mac mini are limited to five orders per customer, while the new iPad Pro is limited to two 11-inch models and two 12.9-inch models per customer.
Coronavirus Hurts iPhone Demand and Supply
Rapidly-spreading COVID-19 has severely hurt Apple iPhone’s supply-chain. The purchase limits are a visible effect of the virus’ impact on Apple’s operations and supply chain. In February, Apple issued a warning to investors that said that worldwide iPhone supply will be temporarily constrained.
Additionally, Apple faces significant threat from grey market resellers who buy Apple products in bulk to distribute them for a profit in areas where they are unavailable or in short supply. Online purchase limit for global customers seems rational especially as Apple has shut down all its retail stores outside China from Mar 13.
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Notably, the company currently operates approximately 500 stores worldwide. Of the total, 52 stores are located in mainland China, Hong Kong and Taiwan, which are currently open.
Citing data compiled by the China Academy of Information and Communications Technology, Reuters reported that Apple sold 494,000 iPhones in China in February, a 61% drop from 1.3 million in the year-ago period.
Moreover, the company has been slow to ramp up production back to normal levels, which is impacting global iPhone supply, per a BBC report. While factories in China have resumed operations, Apple is facing weakening demand as the countries around the world shutter retail stores and enforce social distancing.
Citing demand and supply disruptions, Apple in mid-February had stated that it might not be able to meet its quarterly revenue expectations issued on Jan 28, 2020. Earlier revenue projections for the tech giant’s fiscal second-quarter 2020 were between $63 and $67 billion.
Lower iPhone Sales Affect Apple Suppliers Too
Apple is known to keep suppliers on their toes to such an extent that even minimal changes in demand of iPhone related devices creates a stir among its supplier base. Suppliers including Cirrus Logic (NASDAQ:CRUS) , Skyworks (NASDAQ:SWKS) , Qorvo (NASDAQ:QRVO) and ON Semiconductor are likely to bear the brunt of constrained worldwide iPhone demand supply.
ON and Skyworks have already lowered their financial outlook. ON cited soft order trend in China as the main reason behind the outlook cut. Skyworks foresees weak demand environment for its products due to supply chain disruptions.
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