After COVID-19 lockdowns and labor protests at the largest iPhone factory in Zhengzhou, China, Apple is expected to ship up to 20 million fewer iPhone 14 Pro models than it was first expected, said reliable Apple analyst Ming-Chi Kuo in his latest predictions on the supply chain.
According to a note by the analyst seen by BGR, Kuo believes the production of the Zhengzhou iPhone plant was significantly affected by laborers’ protests. The analyst is cutting his 4Q22 iPhone shipments prediction by about 20% to 70-75 million units instead of the market consensus of 80-85 million units.
Foxconn’s Zhengzhou factory is responsible for around 60 to 70% of all iPhone models produced globally. With the disruptions in the plant, Apple had to issue a statement early this month saying it would be harder than usual to find an iPhone 14 Pro during the next few weeks.
Kuo says the average capacity utilization rate of the Zhengzhou iPhone plant was only about 20% in November, and it’s expected to improve to 30-40% in December – which is not enough to meet demand.
With that, Pegatron and Luxshare ICT have obtained about 10% of the iPhone 14 Pro and iPhone 14 Pro Max orders from Foxconn, respectively, but mass shipments will not be until late December at the earliest, said the analyst. In addition, neither manufacturer can produce as many iPhone models as Foxconn.
Ming-Chi Kuo also shared a few tidbits on how this disruption affects Apple and will likely be a problem for Foxconn in the future:
“Due to the high price of the iPhone 14 Pro series, Apple’s iPhone revenue in 4Q22 may be significantly lower than the market consensus by 20–30% or more. In addition to facing the challenge of lower-than-expected iPhone shipments/revenue in 4Q22, it will also be difficult for Hon Hai to continue to be the exclusive assembler of the iPhone 15 Pro series because Apple wants to diversify supply risks.”
Despite the disruptions, Kuo didn’t hear that Apple had cut orders from component suppliers, meaning it still expects to sell all of these non-shipped iPhone 14 Pro models. The analyst, on the other hand, thinks the opposite will happen.
“I believe that most of the demand for the 4Q22 iPhone 14 Pro series amid the economic recession will disappear due to the significant supply and demand gap rather than deferred.”