Apple's iPhone production could be hit due to coronavirus crisis in China

Foxconn won't be resuming production at its Shenzhen and Zhengzhou factories this week, as originally anticipated

The coronavirus outbreak in China could hit iPhone and AirPod production, causing a shortage of Apple's popular gadgets in markets worldwide.

It comes as Foxconn, one of Apple's main contract manufacturers, disclosed that it is extending the shutdown at its Shenzhen and Zhengzhou sites over continued coronavirus fears. The shutdowns are intended to keep people at home and to contain the spread of the virus.

So far, they have caused minimal economic disruption as the shutdowns come off the back of closures to celebrate the Chinese New Year. However, further stoppages won't just affect China's economy, but supply chains in many different industries across the world.

Public health experts conducted an on-site inspection of Foxconn's facilities in Shenzhen and told the company that it faced "high risks of coronavirus infection" and could not restart work, according to the Nikkei newswire.

Compal Electronics, an iPad supplier with factories in China, also announced last week that it was delaying plans to resume work at its Kunshan facilities in Jiangsu Province. The company had said via its WeChat account that it planned to reopen facilities today.

So far, Apple has reopened only five of its Apple Stores in China, while its 35 other stores remain closed. There is no information on when they may reopen.

The news of Foxconn's extended shutdown comes at a time when Apple has already been facing a shortage of iPhones inventory - specifically, the iPhone 11, the company's newest model. The new problems in China could add further delay to Apple's product launch and shipment plans.

Wedbush Securities analyst Dan Ives estimates that the closure of Foxconn factories for just one week could shave nearly one million iPhones from Apple's sales. That means Apple would be able to produce just 40 million iPhones in the current quarter, between three and five million fewer than the total the company normally produces.

Experts expect Foxconn to operate at only 50 per cent capacity to the end of February, but increasing to nearly 80 per cent of capacity by the end of the next month, according to Reuters.

However, despite all those troubles, Apple's upcoming flagship iPhone, which is expected to be named iPhone 12, should launch on time in September this year.

According to Taiwanese electronics industry newspaper Digi Times, the coronavirus outbreak has also delayed production of iPhone 12, and the company is now expected to begin its production in the summer. The report says Apple should be able to produce an adequate number of devices by September provided coronavirus is under control by then.

Apple has been expected to launch a new budget model in March this year, but this launch may be put back.