Shares of Apple Inc. moved higher on Thursday after four straight days of declines, after a report indicated that iPhone production capacity in China is improving – even as a reopening of a COVID-19 lockdown leaves that country facing rising rates of infection.
Apple’s AAPL,
stock was more than 3% higher in Thursday afternoon trading. The stock has fallen a collective 7% in its four-session losing streak and is down 26.9% year to date, on track to be Apple’s worst year since 2008. The S&P 500 SPX,
down 20.6% in 2022, while the Dow Jones Industrial Average DJIA,
which counts Apple as a component, fell 9.5%.
The move higher came after a Wall Street Journal article on Thursday suggested shorter wait times for Apple’s premium iPhone Pro models and a rebound in production capacity at Foxconn HNHPF,
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factory in the city of Zhengzhou that is the main producer of those phones, based on reports from people involved in the supply chain as well as analysts. Apple is relying on its more expensive iPhone offerings — like the iPhone 14 Pro Max — to boost revenue as demand for smartphones as a whole begins to cool.
The recovery in production follows an outbreak of COVID-19 that resulted in a lockdown at that factory in October, as well as severe travel restrictions and labor protests that hampered production, the Journal noted. Foxconn lifted that lock earlier this month. But as the Chinese government ends most of its strict COVID restrictions, the infection rate has soared, threatening the health of factory workers.
“Supply for the iPhone Pro models continues to improve slowly, with lead time easing further in China, and a majority of SKUs now available for in-store purchase in all geographies, including China for the first time since product launch,” JPMorgan an analyst Samik Chatterjee said in a note on Tuesday.
“Lead times for the Pro models are now tracking in line with times prior to the COVID outbreak in Zhengzhou, China, suggesting that supply is improving and
inching slowly toward parity with demand,” the memo continued.
The Journal, citing other analysts, said the segments of the Zhengzhou facility that produced iPhones were operating at about 70% capacity. To attract more employees, Foxconn offered incentives to some workers willing to work on production lines until March 20, the Journal said.
During its most recent round of quarterly results, Apple’s iPhone sales missed expectations. Analysts have raised questions about demand for the newer iPhone 14 models following reports of a planned pullback in production.
