Apple admits that China's COVID lockdown will reduce shipments of its iPhone 14 Pro models
According to Bloomberg, Apple announced today that production of its premium iPhone 14 Pro and iPhone 14 Pro Max models are being negatively impacted by China's COVID shutdown. With the holiday shopping season approaching, this is not the best time for this to happen, but the bottom line is that Foxconn's largest iPhone assembly facility located in Zhengzhou is operating at a reduced capacity.
In a statement, Apple said, "We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products." Foxconn is a Taiwan-based contract manufacturer that is responsible for the production of the majority of iPhone units assembled every year. t
China's COVID lockdown could reduce availability of the iPhone 14 Pro and Pro Max
On Apple's website, it shows that orders for the iPhone 14 Pro models will be delivered in late November or early December. Last week, the Chinese government instituted a lockdown for the area that includes Foxconn's Zhengzhou facility until November 9th. Video has been posted showing an exodus of Foxconn workers who are leaving the campus in droves. The facility is already home to a COVID outbreak and a quarantine.
Foxconn's plant in Zhengzhou is locked down by the Chinese government
The Zhengzhou factory, according to Counterpoint Research, would usually produce 80% of the basic iPhone 14 base models and 85% of the high-end premium iPhone 14 Pro units. On its website Foxconn wrote that it is working the government "in concerted efforts to stamp out the pandemic and resume production to its full capacity as quickly as possible."
In line with Apple's comments about the plant running at "significantly reduced capacity," Foxconn says that it is lowering its fourth-quarter forecast for the company. Apple also said today that it is working with Foxconn to return the factory to "normal production levels while ensuring the health and safety of every worker." In Zhengzhou, the Chinese government has ordered people and vehicles off of the streets except for medical or essential reasons.
Foxconn now might find it hard to find the additional workers and supplies it will need to keep the assembly lines running at a high rate. At this point in the year, Foxconn is usually running these lines "all out" in an attempt to produce as many iPhone units as possible with the holiday shopping season approaching. Just last week we told you that iPhone production at Foxconn's Zhengzhou facility could decline by as much as 30% year-over-year.
With demand strong for the iPhone 14 Pro models, the production setback could be a big blow for Apple
To keep the assembly lines humming as much as possible. Foxconn is running the factory in a "closed loop" which limits contact with the outside world and forces workers to live and work on factory grounds.
The iPhone 14 Pro and iPhone 14 Pro Max have premium features not offered on the iPhone 14 and iPhone 14 Plus. For example, the Pro models are powered by the latest Apple designed SoC, the A16 Bionic. Instead of the notch, these models have the shape-shifting, multitasking, Dynamic Island notification system. They also have better AMOLED displays than the non-Pro models with a 120Hz refresh rate.
With some analysts noting that demand for the iPhone 14 Pro models is outstripping demand for the cheaper non-Pro handsets, the production setback could be a big blow for Apple.That's because consumers have been buying the more expensive Pro models this year which is great for Apple's top and bottom lines.
In the worse case scenario, Apple might have to delay shipments of its pricier handsets until after the holiday season. Thanks to the four figure price tags on the premium phones, Apple has been able to generate a record for the iPhone's average selling price.
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