(Bloomberg) — Apple Inc.’s most in-demand iPhones this year, the premium Pro models, will fall short of earlier shipment estimates by 6 million units, due to the disruption at their main assembly hub in China, Morgan Stanley said in a note.
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Assemblers of the iPhone are now expected to ship 79 million units in the current quarter, analysts led by Sharon Shih wrote this week. The shortfall from the previous 85 million handsets estimate is entirely down to the iPhone 14 Pro and 14 Pro Max, assembled at the Zhengzhou facility in central China, hit by a surprise weeklong lockdown after a Covid outbreak. Apple acknowledged delays in deliveries and a likely lower shipment of devices due to the disruption.
Premium smartphones have been the one arena of the mobile market that’s shown resilience to the global economic downturn and maintained sales momentum. Entry-level and midrange devices from the likes of Xiaomi Corp., Oppo and Vivo have all faced double-digit drops in demand this year, and even Apple’s non-Pro iPhones have suffered declining sales. That makes the top-tier iPhone devices even more critical to the Cupertino, California-based company’s sales this year, and the interruption at Zhengzhou more harmful.
“The wait time for 14 Pro/Pro Max has extended to four to five weeks as of late versus two to four weeks a month ago, implying demand stays healthy, even with supply gap,” Shih and her colleagues wrote.
The Morgan Stanley analysts consider the impact on assembly to be manageable and now forecast higher-than-usual output in the first few months of 2023 to make up for unfilled demand. Now that Zhengzhou operations have resumed, sustained production there without further disruption is key for Apple and supply partner Hon Hai Precision Industry Co. to make up lost ground, they said.
Local governments near Zhengzhou have arranged buses to ferry workers to Hon Hai’s plant over the weekend to help the Taiwanese company return to full capacity.
China Covid News: Zhengzhou’s Lockdowns Eased, But Foxconn Stays High Risk
–With assistance from Gao Yuan.
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