A steady slide in Apple Inc. shares pushed the iPhone maker’s market value below $2 trillion, the latest casualty in the tech stock rout.  

Apple fell 3.7 per cent on Tuesday, closing at its lowest since June 2021 as concerns about iPhone supply in the important holiday quarter mount and investors lose faith in a reprieve from higher interest rates.

The slump sent Apple’s market value to $1.99 trillion, ending its reign as the last company to sport a $2 trillion valuation after Microsoft Corp and oil giant Saudi Aramco retreated in 2022. 

The milestone marks a fall from grace for Apple. The stock spent much of the past year outperforming the S&P 500 Index but has stumbled in recent weeks amid fears that iPhone production problems in China will ruin holiday sales, the company’s most important period.

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Exactly a year ago, Apple’s shares briefly rallied to climb above $3 trillion in market value as the S&P 500 hit a record high.

The four largest US technology and internet companies lost more than $3 trillion in market value in 2022, amid soaring inflation and slowing sales growth that surged during the Covid-19 pandemic. December was Apple’s worst month since May 2019 with a decline of 12 per cent, steeper than the 9 per cent decline for the tech-heavy Nasdaq 100 Index in the same period.

IPhone production woes

Apple, based in Cupertino, California, has suffered supply disruptions stemming from Covid-19 lockdowns in China, but those have been easing. Manufacturing partner Foxconn Technology Group has brought the world’s largest iPhone plant back to about 90 per cent of anticipated peak capacity.

The Zhengzhou facility, known as iPhone City, produces the vast majority of high-end iPhone 14 Pro and Pro Max devices. In November, thousands of workers had fled or staged protests against extreme Covid rules. But Foxconn ended most of those restrictions last month and offered more incentives for both new and current employees.

Another Apple supplier, Murata Manufacturing Co, added a note of pessimism last month. The company said it expected the tech giant to reduce iPhone 14 production plans further in the coming months. The iPhone accounts for about half of Apple’s revenue.

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“Judging by handset availability in stores, I see a downward revision happening,” Murata President Norio Nakajima said in an interview. “I hope that it won’t be too deep.”

Meanwhile, Nikkei reported on Monday that Apple has told several suppliers to make fewer components for some products, including AirPods, the Apple Watch and MacBooks, given weakening demand.

Apple is expected to deliver its latest quarterly earnings report in the coming weeks. The quarter that runs through December is its biggest sales period of the year, and analysts had initially projected record-setting revenue. Now they’re predicting a slight decline to $122.9 billion, according to estimates compiled by Bloomberg.

Underpinning Apple’s valuation is the hope that the company still has major growth opportunities ahead. Services have been a key area of expansion in recent years and now represent more than a fifth of revenue. The company also is working on some big swings, such as a mixed-reality headset that could be unveiled as soon as this year and an electric vehicle.