According to analyst Ming-Chi Kuo, Apple could ship 15 million to 20 million fewer iPhone Pro and iPhone Pro Max units than expected following the COVID-19 lockdown and worker protests at Apple’s iPhone assembly plants in China.
Kuo believes there are “significant downside risks” to Apple and the iPhone following worker protests at Foxconn’s Zhengzhou iPhone assembly plant and Covid restrictions. Kuo notes that the market consensus was that Apple would ship 80-85 million units of the iPhone 14 Pro series in Q4 2022, compared to the 70-75 million that Kuo now forecasts.
“Production at the Zhengzhou iPhone factory was significantly affected by labor protests, so I cut 4Q22 iPhone shipments by about 20% to 70-75 million units (vs. market consensus of 80-85 million units),” Kuo wrote. post on Medium.
Last week, workers at a Zhengzhou iPhone factory clashed with police over working conditions as the company and local authorities imposed restrictions to contain the rising number of COVID-19 cases at the factory.
In the same way: The best 5G phones: Which flagship is the best?
The Zhengzhou factory, operated by Foxconn, is responsible for most of the new iPhones. It employs approximately 200,000 people.
Kuo estimates that the Zhengzhou plant was operating at about 20% of capacity in November and expects that to increase to 30% to 40% in December. He doesn’t expect mass shipments of iPhone 14 models to resume “late December at the earliest.”
In the first week of November, Apple said it expects lower shipments of the iPhone 14 Pro and iPhone Pro Max and longer wait times due to Covid-19 restrictions at its Zhengzhou factory. Apple didn’t say how much less shipments would be, but Bloomberg reported at the time that Apple had lowered its estimate from 90 million to 87 million. Apple noted that demand for both models remains strong.
Problems at the Zhengzhou plant are likely to cause a shortage of nearly six million iPhone Pro units this year, Bloomberg reported on Monday, citing a source familiar with the assembly operations. It reported that Apple plans to close this gap in 2023.
However, Kuo believes that most of the demand for iPhone 14 Pro models will disappear during the recession, not stay, because of the large gap between supply and demand.
He also estimates that Apple’s revenue in the fourth quarter of 2022 will be up to 30% lower than analysts’ forecasts due to the high price of the iPhone 14 Pro series, which starts at $999.
Apple’s website currently lists a four-week waiting time for both iPhone 14 Pro models. In early November, the wait was three to four weeks. After Apple announced the expected delay, the wait time was four to five weeks.