[Long Room] Now that Apple has opened the floodgates and made it entirely clear that China's economic collapse will slash revenue guidance on the year and lead to production woes through April, an onslaughter of earnings downgrades from other top technology companies with significant operations in China could be imminent.
Evidence grows by the day of supply chains grinding to a halt as the second-largest economy in the world falters (as described here last week)...
China - Output - Supply - Chains - Companies
We've described how China's economic output remains frozen, and even if supply chains were able to restart, companies don't have enough capital to cover wages, or have delayed or stopped paying workers, suggesting that the Covid-19 outbreak has left businesses on the brink of disaster. Worse, workers can't freely move around the country, and many are subjected to travel restrictions and quarantines, which has forced a massive labor shortage.
This is creating a perfect storm that could lead to an extended period of depressed factory output, triggering future shortages of products destined for Eastern and Western markets, and even more ripples across global supply chains. |