IPhone maker Apple’s warning that it will not meet sales target during the quarter due to the coronavirus epidemic points to challenging times for its chip and other suppliers as well as for rivals who also rely on China to build their products.
Apple said while many factories that make iPhones have reopened for work, they were ramping up more slowly than anticipated.

Stacy Rasgon, a Bernstein analyst, said Apple’s woes probably also mean fewer chips will be sold throughout the mobile device industry because the overwhelming majority are made in China.

Research firm Canalys estimates both Apple, which outsources much of its manufacturing to Taiwan’s Foxconn, and rival Huawei Technologies have 99 percent of their production in China.

China, the world’s No. 1 smartphone market, is likely see sales halve in the first quarter due to the virus, analysts have said.

Chinese rivals Oppo, Xiaomi and Vivo have 83 percent, 72 percent, and 65 percent of their production in China respectively.

Reuters reported last week that roughly 10 percent of Foxconn’s workers in China resumed production, while other plants in the country remain largely shuttered.

Apple’s chip suppliers include Samsung Electronics, Taiwan Semiconductor Manufacturing (TSMC) and SK Hynix.

Analysts at ANZ noted Qualcomm was vulnerable to disruptions caused by the epidemic as it supplies mobile modem chips to almost all major smartphone makers and generates nearly half of its sales from China.

U.S.-based suppliers that do a lot of business with Apple include Broadcom, Qorvo and Skyworks Solutions.

Broadcom makes wireless components for iPhones and said last month it had signed a deal to supply Apple for contracts worth as much as $15 billion. Sales to Apple accounted for 20 percent of its annual revenue in fiscal 2019.

Qorvo, which sells parts that help phones connect to wireless data networks, generated around one third of its revenue from Apple in fiscal 2019.

Skyworks, another wireless component supplier, got more than 10 percent of its annual revenue from Apple.

Other U.S. suppliers to Apple include Texas Instruments. Its battery charging chips have been found in iPhone teardowns, although the company sells across a broad spectrum of the electronics industry.

In Europe, the Netherlands’ NXP Semiconductors supplies Apple with the near-field communications chips used in the iPhone’s Apple Pay contactless payments feature, according to TechInsights teardowns and industry analysts.

Chips made by Franco-Italian firm STMicroelectronics are used for wireless battery charging and for infrared cameras in iPhones, according to teardowns.

Mike Fawkes, who previously ran supply chain operations for Hewlett-Packard, said even if it wanted to, Apple was unlikely to find alternative production sources soon.

“They’re stuck with China for some period of time,” he said. “It’s very hard when you’re managing a big battleship like they are.”