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Thursday, Sep 18, 2025

Coronavirus compounds the hurdles and uncertainties for global companies doing business in China, as Apple loses US$43 billion in market value

Apple warns that the outbreak will affect its first-quarter revenue as other companies with wide exposure to the Chinese market weigh the potential impact. ‘We expect an avalanche of companies to follow suit’ with a warning on earnings, US analyst says

On Monday, Apple lowered its revenue guidance for this quarter, citing the impact of the coronavirus outbreak in China. The move caught Wall Street investors off guard and wiped out US$43 billion of Apple’s market value in less than three hours.

The company’s fears for the effects of the virus – and the accompanying uncertainty – are widely shared among American businesses, particularly those that have significant exposure to the huge Chinese market. Apple is considered something of a bellwether because of its dependence on China for sales as well as the supply chain for parts and manufacturing.

“We believe Apple [scaling back its earnings outlook] is the tip of the iceberg. We expect an avalanche of companies to follow suit,” said Dan Ives, a New York-based analyst at brokerage firm Wedbush Securities.

Still, he added, “it’s too early for many other tech food chain and semiconductor players to warn about guidance midway through the quarter”.



More than a third of S&P 500 companies that have reported results this year have discussed the coronavirus on their earnings calls, according to the data analytics firm FactSet. But few can pinpoint the impact it might have other than citing a great deal of “uncertainty”.

Walmart, the world’s largest retailer, operates some 430 stores in China. It said Tuesday that it would continue to monitor the outbreak but was not adjusting its outlook for the year. It added that Chinese sales had not slowed despite the quarantine, as shoppers continued to patronise Walmart outlets for food and other goods.

Foreign investors have long known that doing business in China means grappling with an outsize level of ambiguity in a country where transparency is lacking. The country’s capital controls that restrict the flow of money in and out of the country, as well as the opaqueness of the bidding processes involving local governments, are long-standing concerns.

Chinese companies that are listed in the US have also had decade-long conflicts with securities regulators over the paucity of information they are willing to disclose.

While Beijing showed its ability to control the daily movement of its tens of millions of people by locking down cities as the scale of the epidemic was becoming apparent, questions remain about whether initial reports on the contagion were prompt and whether official data is authentic.

Just in the past few weeks, the official counting method to determine new infections has changed three times, leading to wide swings in numbers and making the charting of data and trends nearly impossible.

The disease, which has been officially named Covid-19, was first reported in December and has killed more than 2,200 people and infected nearly 77,000 others worldwide.

Tech companies are among those weighing the potential effects of the outbreak.

“There is significant uncertainty around the impact from the coronavirus on handset demand and supply chain,” Akash Palkhiwala, Qualcomm’s chief financial officer, said this month.

Qualcomm, the biggest supplier of chips for mobile phones, is based in San Diego, California, but has more than 46 per cent of its revenue generated from China. On February 5, the company said it had “limited information” to have a comprehensive analysis on the virus’s impact.

The chief executive of Arizona-based chip maker Microchip Technology, Steve Sanghi, said “we are still in the early days of how this situation is playing out.”

“We have no way to model how the rest of the quarter will play out for the coronavirus situation and what the consequent business impact may be,” he said on February 4.

Another major company with its supply chain affected by the virus is Amazon, with more than 40 per cent of its sellers estimated to be based in China. The company has asked some suppliers “to stockpile on certain products shipped from China, in anticipation of potential supply chain slowdowns caused by the coronavirus outbreak in the region,” according to a Business Insider report.

The travel industry has been particularly hard hit by the global outbreak.

Although cruise-line companies are reluctant to release booking data, some have pointed to a double-digit drop in bookings, according to the American Society of Travel Advisors, an industry group.

Norwegian Cruise Lines and Carnival Corporation – owner of the Diamond Princess, which was quarantined in Japan amid a ship-wide Covid-19 epidemic – have acknowledged the negative impact the coronavirus is likely to have on their businesses in upcoming quarters.

Royal Caribbean, which has barred anyone, regardless of nationality, who has been to China, Hong Kong or Macau in the past 15 days from boarding its ships, said: “There remains too many variables and uncertainties to reasonably estimate the overall financial impact relating to the Wuhan coronavirus outbreak.”

Asian carriers including Cathay Pacific, Singapore Airlines and Qantas are poised to lose about US$27.8 billion in revenue as regional air travel is on course to shrink by 13 per cent, the first downturn since 2003, the International Air Transport Association said on Thursday.

As the world’s second-largest economy, however, China will continue to be a key market that major global conglomerates can’t afford to ignore.

For Apple – which earned US$44 billion in revenue in Greater China during the 2019 financial year, mostly from selling iPhones – leaving the market is not an option.

Lynnette Luna, principal analyst at GlobalData, said that while China was home to much of Apple’s manufacturing, and Chinese consumers were big buyers of Apple products, the current situation was not a long-term threat.

“That is not a reason to panic about the world’s supply of Apple products,” she said. “The slowdown should be a temporary glitch.”

She added: “This slowdown does not mean less demand for Apple products inside of China. It simply delays that demand to later in 2020.”

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