Apple's$Apple(AAPL)$ share price was also dragged down after Foxconn's Shenzhen Park shut down.
On Monday, Eastern time, Apple$Apple(AAPL)$ 's share price closed down 2.66%, about 17% lower than the high in early January, and has fallen below the 200 day moving average, the lowest level since November last year. Monday's decline evaporated Apple's market value by more than $60 billion and fell below $2.5 trillion.
Analysts said that if the shutdown time of Foxconn Shenzhen Park is not significantly extended, it will have a limited impact on the supply chain. However, if the shutdown time exceeds the expectation, it may have a chain impact on other parts.
Analyst: the impact of shutdown may be limited
In the evening of March 13th, the Shenzhen city New Coronavirus pneumonia epidemic prevention command headquarters issued a circular saying that since from March 14th to 20th, all businesses will be working at home except for public service enterprises such as water, electricity, fuel, gas, communications, sanitation, grain, oil, meat and vegetables, which guarantee citizens' lives and basic urban operation, and to protect Hongkong's supply enterprises. Suspend production and business activities.
Affected by this, Foxconn's parks in Shenzhen (Longhua, Guanlan, etc.) have also suspended operation, and the actual resumption time will be notified by the local government.
According to media reports, Foxconn has issued a statement saying: "due to the diversification of our production bases in China, we have adjusted our production lines to minimize the potential impact."
Analysts currently believe that the impact of shutdown is limited because Foxconn should have an inventory buffer. Moreover, although there are some iPhone production lines in Shenzhen Park, nearly 50% of Foxconn's iPhone production lines are located in Henan.
Bank of America reported that Apple could start to increase production at its production base in Henan to make up for some of the losses. "Apple / Foxconn has the ability to transfer production to other regions in the short term as long as the blockade time is not significantly extended," analysts wrote in the report
However, analysts also warned in the report that if the shutdown time is longer than expected, "it may have a chain reaction to other parts and create a production gap."
Bank of America analysts said they would not cut their forecasts for the time being, but remained cautious about any "long-term supply impact".
The selling tide of technology stocks may continue
Apple's share price has fallen for five consecutive weeks, the longest weekly decline since May.
Of course, Apple's decline was also affected by the general sell-off of technology stocks this year.
The decline in technology stocks was partly due to concerns that economic growth would slow as the Fed began to raise interest rates; On the other hand, the outbreak of the Russian Ukrainian war led to a surge in commodity prices, which exacerbated people's concerns about inflation, which also put pressure on technology stocks.
Technology stocks fell across the board on Monday, with the NASDAQ down 2%, about to reach a level that could represent a bear market. At the same time, the S &P 500 index fell into a "death cross" - the 50 day moving average has fallen below the 200 day moving average.
Among other large technology stocks, Amazon fell 2.9%, alphabet fell 3.5%, meta fell 0.9% and Microsoft shares fell 0.7%.
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