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Apple (NASDAQ:AAPL) stock closed 2.6% lower yesterday – a new 3-week low – on the back of the continued supply chain headwinds coming from China.
Bloomberg News reported in recent days that Apple could see a production shortfall of close to six million iPhone Pro units this year as major supplier Foxconn (TW:2354) struggles to keep its key factory in Zhengzhou at full operational capacity.
Both Apple and Foxconn said they are focused on getting workers back to assembly lines in Zhengzhou after online videos showed violent protests and clashes with police and security. Foxconn’s Zhengzhou site produces the vast majority of iPhone 14 Pro and Pro Max devices, arguably Apple’s two most important hardware products given the high demand since the September launch.
Wedbush analysts said yesterday that the China situation “has been an absolute gut punch to Apple’s supply chain.”
“We estimate that Apple now has significant iPhone shortages that could take off roughly at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China around Foxconn production and protests. In many Apple stores we are seeing major iPhone 14 Pro shortages of up to 35%/40% of typical inventory heading into December with online channels pushing deliveries into early January in many cases depending on model/storage/color,” they wrote in a client note.
Today, Evercore ISI analysts also updated iPhone estimates to reflect China headwinds. The analysts lowered iPhone revenue estimates by $8 billion for the December quarter, although they continue to insist that this revenue is deferred, rather than lost.
“Protests in China against the lockdowns are growing, it’s entirely possible the situation gets worse and actually hurts end-demand in China. So far, we think demand implications are minimal the bigger challenge is iPhone production,” the analysts said in a note.
As of 08:00 EST (13:00 GMT), Apple stock is up 0.5% in pre-market Tuesday.
