The total iPhone 14 Pro and 14 Pro Max shipments in 4Q22 will be 15–20 million units less than expected. Significant downside risks to Apple & iPhone supply chain due to Zhengzhou iPhone plant labor protests
2 min readNov 29, 2022
- The production of the Zhengzhou iPhone plant was significantly affected by laborers’ protests, so I cut the 4Q22 iPhone shipments by about 20% to 70–75 million units (vs. the market consensus of 80–85 million units).
(1) The total iPhone 14 Pro and 14 Pro Max shipments in 4Q22 will be 15–20 million units less than expected.
(2) The average capacity utilization rate of Zhengzhou iPhone plant was only about 20% in November, and it’s expected to improve to 30–40% in December.
(3) Pegatron and Luxshare ICT have obtained about 10% of the iPhone 14 Pro and 14 Pro Max orders from Foxconn, respectively. But mass shipments will not be until late December at the earliest.
(4) According to the production recovery progress of the iPhone 14 Pro series, shipments in December were still significantly lower than expected. - Downside risks to Apple and the iPhone supply chain. Apple’s 4Q22 revenue and EPS have downside risks. Hon Hai/Foxconn is facing structural competition challenges, and iPhone component shipments may decline significantly in QoQ & YoY/HoH & YoY in 1Q23/1H23.
(1) Due to the high price of the iPhone 14 Pro series, Apple’s iPhone revenue in 4Q22 may be significantly lower than the market consensus by 20–30% or more.
(2) In addition to facing the challenge of lower-than-expected iPhone shipments/revenue in 4Q22, it will also be difficult for Hon Hai to continue to be the exclusive assembler of the iPhone 15 Pro series because Apple wants to diversify supply risks.
(3) iPhone 14 Pro series shipments in 4Q22 were significantly lower than expected, but component suppliers were generally not informed by Apple to cut orders, resulting in 4Q22 component inventory higher than normal for several weeks, which will lead to component shipments may have a more significant QoQ/HoH decline in 1Q23/1H23. - I believe that most of the demand for the 4Q22 iPhone 14 Pro series amid the economic recession will disappear due to the significant supply and demand gap rather than deferred.
