Recent social unrest in China and the country’s zero covid policy have contributed significantly to the decline in iPhone 14 production. Ming-Chi Kuo, an analyst for TF International Securities specializing in Apple, plunged, this Tuesday, November 29, into the figures for the shipments of the 14 Pro and Pro Max models. Its first estimates are betting on 15 million lost iPhone sales for Apple by the end of the year.
A 20% reduction in iPhone shipments
Nothing is going well in the Empire of the iPhone, the factories are no longer running. At the beginning of November, the largest smartphone factory for Apple in the world was paused due to zero covid policy. Following this event, two weeks later, the anger of the employees mounted after they had not received bonuses promised by Foxconn. The Zhengzhou production site was therefore forced to stop production. According to the analyst, Apple had to cut its iPhone exports for the fourth quarter by 20% after the incidents affecting the factory of 200,000 people.
In his blog post on Medium, Ming-Chi Kuo says the numbers would be even worse than expected for Apple. The average rate of iPhone 14 Pro production capacity for the month of November would be only 20%. Fortunately, for the Apple brand, it could rebound slightly in December with a rate of 30% to 40%.
In order to solve its delivery problems, Apple is reorganizing its orders between its exporters to meet consumer demand. Despite this strategy, mass exports may not resume until the end of December. After the most important period for the company, the end of year celebrations.
The sluggish economic environment and shipping delays raise another issue, according to the analyst. He believes that much of the iPhone 14 Pro demand this quarter will not be caught up and will disappear. Customers will have two options, buy a different iPhone, or switch to the competition.
Is Apple really affected financially?
This drop in production should not weaken Apple’s financial health too much. The company has cash of up to $111 billion, a number twice that of Alphabet. This cushion allows the company to undergo several crises before suffering a real deterioration in its activity. In addition, Apple has diversified its recipes for several years. If the iPhone is one of its main sources of income, the company can rely on the sale of applications in its App Store, the subscription services it offers, or the other devices it sells.
The effects of the drop in production could above all be felt on the company’s share price, which has been battered like all the Tech indices since the start of 2022. empty.
With more than 90% of iPhones built at this Foxconn factory and the impact of events, Apple is aware of its reliance on Chinese manufacturing power. To get out of it, the Apple brand exports the manufacture of its devices to different countries. Tech giant plans to relocate 25% of its production in India by 2025.
