China's zero Covid restrictions are set to cost Apple iPhone production dearly. Production of iPhone 14, the cheapest among the iPhone 14 lineup, will fall 16 million units short of expectations this year in the wake of the coronavirus restrictions in China and weak demand for the entry-level iPhone models, the media has reported.
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According to a report by news agency Bloomberg, UBS analysts have slashed their forecast of total iPhone 14 production to 76 million, down from 92 million units for the second half (H2) of 2022, which is a 20 per cent decline from last year. The analysts have attributed the lower expectations to both the manufacturing disruption faced by iPhone's contract manufacturer Foxconn, also known as Hon Hai Precision Industry Co., and weakening demand for lower-end iPhone 14 models.
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"It is important to monitor whether lengthening wait times for the iPhone 14 Pro/Pro Max affect demand," UBS analysts led by Grace Chen wrote in a December 1 note, the Bloomberg report added.
"The speed with which Apple and Hon Hai can resolve the challenges at Zhengzhou is key to 2022's fourth quarter and 2023's first quarter volume."
This comes within a week of reports saying Apple will lose production of as many as 6 million iPhone Pro models due to the ongoing disruption at Foxconn’s biggest iPhone manufacturing factory in the Zhengzhou district of China. The Zhengzhou Foxconn campus, which normally houses more than 200,000 employees is where the vast majority of iPhone Pro models are assembled has been hit by protests in the wake of strict Covid-19 restrictions.
It has to be noted that the iPhone 14 Pro and iPhone 14 Pro Max are the most in-demand handsets this year, offsetting slumping sales for its regular iPhone 14 editions. The Foxconn situation serves up another reminder of the dangers for Apple of relying on a vast production machine centered on China at a time of unpredictable policy and uncertain trade relations.