Shares of Apple Inc. moved higher on Thursday after four straight days of declines, after a report indicated that iPhone production capacity in China was improving — even as a reopening from COVID-19 lockdowns leaves that country facing rising rates of infection.
Apple’s AAPL, +2.94% stock was more than 3% higher in Thursday afternoon trading. The shares fell a collective 7% in their four-session losing streak and are down 26.9% year to date, which is on track to be the worst year for Apple since 2008. The S&P 500 SPX, +1.81% is down 20.6% in 2022, while the Dow Jones Industrial Average DJIA, +1.15%, which counts Apple as a component, has fallen 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 a Foxconn HNHPF, +0.86% 2354, -2.49% plant in the city of Zhengzhou that is the primary producer of those phones, based on reports from people involved in the supply chain as well as analysts. Apple relies on its more expensive iPhone offerings — such as the iPhone 14 Pro Max — to boost revenue when demand for smartphones overall starts to cool off.
The recovery in production follows a COVID-19 outbreak that resulted in a lockdown at that factory in October, as well as harsh travel restrictions and worker protests that had hampered production, the Journal noted. Foxconn lifted that lockdown earlier this month. But as the Chinese government ends most of its stringent COVID restrictions, the infection rate has soared, threatening the health of the factory workers.
“Supply for the iPhone Pro models continues to improve slowly, with lead times moderating further in China, and a majority of SKUs are now available for in-store pickup across all geographies, including China for the first time since product launch,” JPMorgan analyst Samik Chatterjee said in a note on Tuesday.
“Lead times for the Pro models are now tracking in line with lead times seen prior to the COVID outbreak in Zhengzhou, China, suggesting that supply is improving and
inching slowly towards parity with demand,” the note continued.
The Journal, citing other analysts, said that the segments of the Zhengzhou facility that made iPhones were running at roughly 70% capacity. In an effort to attract more employees, Foxconn had offered incentives to some workers who were willing to work on production lines through March 20, the Journal said.
During its most recent round of quarterly results, sales of Apple’s iPhone missed expectations. Analysts have raised questions about demand for the newer iPhone 14 models after reports of a planned pullback in production.