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Persistent supply chain disruptions will result in 15 million to 20 million less shipments of Apple iPhone 14 Pro and iPhone 14 Pro Max models than expected . units, according to Ming-Chi Kuo.
Foxconn's factory in Zhengzhou, China, is facing a variety of problems, including problems caused by quarantine restrictions and worker unrest. The problems at the plant are now so significant that one celebrity Apple analyst has slashed its shipment forecast by 20%.
According to TF Securities' Ming-Chi Kuo, production at the plant, the largest assembler of the iPhone Pro model, has dropped sharply due to worker protests, leading to an expected cut of 70-75 million units. will go on sale in the fourth quarter of 2022. In comparison, the market consensus is between 80 and 85 million units.
This is partly driven by expectations that Pro and Pro Max shipments will be 15 to 20 million units lower than expected in the quarter.
Kuo suggests that the plant's average capacity utilization was only 20% in November, but is expected to rise to 30-40% in December.
To solve this problem, Pegatron and Luxshare ICT received about 10% of Foxconn's Pro and Pro Max orders. However, it is believed that mass deliveries of this pair will not occur until the end of December.
Kuo believes there are risks to revenue and earnings per share this quarter due to problems with the iPhone supply chain. Foxconn also has its own structural issues that could lead to a significant reduction in the supply of iPhone components in the first half of 2023.
iPhone revenue could be well below market consensus due to declining sales of expensive Pro models. Kuo predicts that iPhone revenues could fall by “20% to 30% or more.”
For Foxconn, issues could make it difficult to maintain its position as exclusive iPhone 15 Pro assembler in 2023 as Apple likely wants to “diversify supply risk,” Kuo wrote.
As for the full effect of the problems, although some analysts believe that demand will cause some sales to be delayed to the next quarter, Kuo is more pessimistic.
“I believe that much of the demand for the iPhone 14 Pro 4Q22 series during the economic downturn will disappear due to a significant supply-demand gap, rather than being delayed,” the analyst suggests.