Apple iPhone 14 Dealt Production ‘Gut Punch’ With Fresh China COVID-19 Lockdowns - CRN

Computing News

Shane Snider

November 07, 2022, 09:22 AM EST

Apple says caller pandemic lockdowns person ‘temporarily impacted’ accumulation of iPhone 14 Pro and iPhone 14 Pro Max models astatine the Foxconn mill successful Zhengzhou, China.

With airy request already hitting entry-level iPhone models, Apple Sunday said caller COVID-19 mill shutdowns successful China would make “lower” shipments and “significantly reduced capacity” for its Max and Pro models heading into a important vacation buying season.

Customers should expect longer hold times erstwhile ordering, the institution said successful a statement. China’s “zero COVID” argumentation strangled accumulation astatine Apple’s superior iPhone 14 Pro and iPhone 14 Pro Max assembly mill tally by Foxconn successful Zhengzhou, China.

Wedbush analysts Dan Ives and John Katsingris said the quality couldn’t person travel astatine a worse clip for Apple—one of the fewer companies posting beardown fiscal results successful the look of pugnacious economical times. “After battling the macro headwinds and delivering a beardown September 4th guidance successful a stark opposition to the remainder of Big Tech, this latest zero Covid concern is an implicit gut punch for Apple successful its astir important vacation quarter,” the analysts wrote, adding they expect to spot shutdowns negatively impacting “roughly” 3 percent of iPhone income this quarter.

“While not the quality immoderate bull wants to perceive from Apple, it’s a proviso contented and related to China’s zero Covid argumentation which is simply a precise frustrating concern for Apple (and its investors) yet again but not request driven,” they wrote. Wedbush is maintaining a $200 terms people contempt the news.

Taipei, Taiwan-based probe steadfast Trendforce has projected iPhone shipments for the 4th fourth to beryllium lowered by 2. cardinal to 3 cardinal units. Zhengzhou was deed by a question of COVID-19 outbreaks successful the mediate of October. The steadfast said China’s COVID argumentation could thrust down iPhone shipments into the archetypal 4th of 2023, worrying that wintertime surges of COVID volition further interaction production.

This is not the archetypal Foxconn shutdown successful China that slowed Apple’s accumulation this year. In March, lockdowns successful the manufacturing hub of Shenzhen, China, were hard-hit with COVID lockdowns. That lockdown temporarily shuttered 2 of Foxconn’s factories. Foxconn answered the situation with a “closed-loop” strategy that had workers surviving connected field and investigating daily. Still, the proviso concatenation for Apple and different tech companies took a large hit. Apple warned of an up to $8 cardinal gross deed but managed to support that driblet nether $4 cardinal for its second-quarter results.

Apple said it was focused connected moving with the factories to support workers portion resuming operations. “As we person done passim the COVID-19 pandemic, we are prioritizing the wellness and information of the workers successful our proviso chain,” the institution said successful a statement. “We are moving intimately with our supplier to instrumentality to mean accumulation levels portion ensuring the wellness and information of each worker.”

Apple was 1 of the sole agleam spots for the tech manufacture successful 2022 arsenic pandemic-fueled request has waned. The company’s fourth-quarter results bushed expectations and delivered an all-time Mac gross grounds and wide beardown results for its smartphones and wearables.

“The satellite continues to beryllium unpredictable, arsenic aged challenges germinate and caller ones emerge,” Apple CEO Tim Cook said during a league call.

Trendforce said the institution could spot worsening results successful 2023. “The wintertime play is mostly conducive to the dispersed of diseases specified arsenic COVID-19. Hence, determination is simply a anticipation that China could enact zero-COVID lockdowns astatine a much predominant gait successful the future. Such a script would widen the effects of this argumentation to the request broadside and disrupt Apple’s iPhone accumulation program for the (first 4th of 2023),” the steadfast wrote.