Apple may see $8 billion holiday revenue drop over iPhone delays

Posted:
in iPhone
Investment bank Piper Sandler expects Apple and Foxconn to catch up with iPhone 14 Pro production in December, but will still fall short by around nine million iPhones.




Although China has now lifted its latest COVID lockdown in Zhengzhou, Foxconn's major iPhone factory there is significantly behind on its production of the iPhone 14 range. In a note to investors seen by AppleInsider, Piper Sandler says that overall, it continues to "believe that Apple remains a formidable brand."

While it is cutting its estimates for Apple's December quarter revenue by $8 billion, it still rates the company as Overweight despite our temporary reduction from unforeseen events."

"We are reducing our estimates for Apple primarily from supply chain fears around turmoil in the Zhengzhou plant," says the note. "It has been at the forefront of public knowledge that given China's zero Covid policy, there have been major disruptions at this plant."

"We know that Foxconn's Zhengzhou plant is the main hub for iPhone production with greater than 50% [of] assembled iPhones coming from this plant," continues Piper Sandler. "We believe that the majority of the disruptions took place in the month of November where utilization for the plant may have fallen to 50% or below."

Catching up with production delays

Foxconn has moved some iPhone production to India, but the investment bank's analysts don't see that as significant. "[In] our opinion, India still accounts for less than 5% of total iPhone 14 production and is likely to help only to a limited degree at this time," it says.

The company does expect that Apple "will try its best to catch up to some of the production in December," though, and also "will prioritize iPhone 14 Pro production over other models."

Separately, Piper Sandler also undertakes a biannual survey of teenagers that includes asking about plans to buy iPhones. The latest edition in October 2022 showed 88% of teenagers intend to buy.

Read on AppleInsider

Comments

  • Reply 1 of 6
    red oakred oak Posts: 988member
    “Piper Sandler says that overall, it continues to "believe that Apple remains a formidable brand." 

    Really ?   Because I was getting worried it might not be.   So insightful  
    watto_cobra
  • Reply 2 of 6
    lkrupplkrupp Posts: 10,325member
    Yeah, the flight from AAPL was so intense yesterday that it was up only a measly $6.86, almost 5%. /s
    edited December 2022 watto_cobra
  • Reply 3 of 6
    DAalsethDAalseth Posts: 2,568member
    I don’t think it was just the delay in iPhone manufacturing. We were planning on updating at least two of our systems this year, now that’s been put off until the spring, or maybe fall. Times are tough all over. I don’t think it’s just iPhones that will be below analyst’s optimistic predictions. I expect a very slow Christmas for all retailers, in all markets, of all products. 
    watto_cobra
  • Reply 4 of 6
    danoxdanox Posts: 1,518member
    Mentally out of it like Elon, what day is it? Is this Mars? :smile:
    edited December 2022 avon b7watto_cobra
  • Reply 5 of 6
    thrangthrang Posts: 949member
    Apple recently began iPhone 14 manufacturing in India - articles never really reference this… I have no idea as to capacity and while I’m sure it’s not close the China, I do wonder how much ramp up capability they have there to offset some of the slowdown in China…
    watto_cobra
  • Reply 6 of 6
    MadbumMadbum Posts: 424member
    DAalseth said:
    I don’t think it was just the delay in iPhone manufacturing. We were planning on updating at least two of our systems this year, now that’s been put off until the spring, or maybe fall. Times are tough all over. I don’t think it’s just iPhones that will be below analyst’s optimistic predictions. I expect a very slow Christmas for all retailers, in all markets, of all products. 
    Well thing is “your business systems” can wait but IPhones are what people have in their hand come hell or high water. It’s become frankly just important as air in peoples lives. Of course I am exaggerating but my point is given how important the phone is in our lives, and Apple being the preferred brand for most, people will spend for Apple over other things like TV, washers or business systems like you 
    watto_cobra
Sign In or Register to comment.