14 DAY TRIAL // The current tensions happening in China obviously can’t be good news for companies relying on local production power, and Apple is one of those whose operations are impacted in a significant manner.
While the Cupertino-based tech giant has remained tight-lipped on how its Chinese suppliers have been hit by the recent protests, information shared by analyst Ming-Chi Kuo reveals that Apple could eventually reduce production for this quarter by as much as 20 percent.
This means Apple will make just a maximum of 75 million units, as compared to the original production estimates of up to 85 million units.
“The average capacity utilization rate of Zhengzhou iPhone plant was only about 20% in November, and it’s expected to improve to 30–40% in December,” Kuo says.
Despite the production struggles, Apple isn’t yet cutting orders. Kuo reveals that the company also recorded lower shipments of the iPhone 14 Pro during the quarter. This should generate more inventory, which at the end of the means that the waiting times for a new iPhone could also drop significantly.
“iPhone 14 Pro series shipments in 4Q22 were significantly lower than expected, but component suppliers were generally not informed by Apple to cut orders, resulting in 4Q22 component inventory higher than normal for several weeks, which will lead to component shipments may have a more significant QoQ/HoH decline in 1Q23/1H23,” Kuo notes.
“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.”
Apple has previously warned of production challenges at its Chinese suppliers, with the company explaining that the waiting time for a new iPhone could therefore be increased significantly, especially for the Pro models (which are believed to the ones spearheading the sales of the new generation).