Despite Pegatron lockdown, iPhone SE 3 remains in stock confirming weak demand for the phone

A month ago, we told you that Foxconn, Apple's top contract manufacturer, had to temporarily close its factory in Shenzhen for a few days thanks to the return of COVID. At the time, Foxconn said that it would be forced to rely on backup plans to prevent disruptions.

Today, Bloomberg reports that Pegatron, another of Apple's two Taiwan-based iPhone manufacturers, had to temporarily shut down production in China as the country battles the worse COVID outbreak over the last two years. Pegatron's plants in Shanghai and Kunshan, both of which churn out iPhone models, suspended production and the decision to resume production will come from the government. Pegatron is currently trying to weigh the financial cost of halting production.

Both factories had remained open as local governments allowed some facilities to continue running their assembly lines. Apple relies on Foxconn, Pegatron, and Luxshare Precision to assemble its top-selling product, the iPhone. Unlike Foxconn and Pegatron, Luxshare is headquartered in China.

In Shanghai, communist party chief Li Qiang promised to continue to take the actions needed to reduce the impact of the latest COVID outbreak. Still, on Monday, the city said that it was partially easing up on a city-wide lockdown although most residents are still forced to follow restrictions on travel.

The lockdown in Shanghai has already caused a food shortage and in Kunshan, the city said that it will continue to keep its COVID policies the same even though the number of cases has declined. Kunshan residents have been asked to comply with the restrictions put in place. Over the past four days, three positive COVID tests were reported in Pegatron's dormitory in Kunshan.

The impact to the iPhone supply chain in China has been mixed; suppliers in Shanghai have been able to continue producing components but logistics issues are preventing the shipments of these components to the contract manufacturers. As a result, according to consultancy Trendforce, Pegatron has only a few weeks of components remaining in inventory.

Top Apple analyst Ming-Chi Kuo punched out a tweet today noting the iPhone SE 3 models made exclusively by Pegatron are still in stock on Apple's online stores despite the lockdown in China. As Kuo notes, this is a strong sign that demand for the retro-iPhone is lackluster since the lockdown did not impact the inventory status of the device. 

Kuo recently cut his forecast of iPhone SE 3 shipments from a range of  25 million-30 million units to a lower range of 15 million-20 million units. Priced at $429 and up, the iPhone SE 3 is powered by the same 5nm A15 chipset that powers the iPhone 13 series, and includes support for 5G connectivity.

Over two years when the pandemic was still in its early days in the U.S., Apple informed its Apple Store Geniuses who handle iPhone repairs and replacements that replacement iPhone units were in short supply. A few days later, an informal poll of New York City retailers and carriers revealed that the latest iPhone models at that time were in short supply. The current lockdown and halt in iPhone production is not enough to disrupt supplies of the handset like it was back in 2020.

China has a strict zero-tolerance policy in effect as far as COVID is concerned as there are reports of government officials knocking on the doors of residents in Shanghai to test them for COVID. Those testing positive are reportedly being taken away to a central location where they are quarantined along with others who test positive.