Apple faced challenges with the iPhone 14 — especially the Pro and Pro Max — last fall when a COVID-19 outbreak in China affected manufacturing partner Foxconn. Now the company’s stock has hit a 52-week low that represents $1 trillion in lost value as further forecasts of iPhone challenges have emerged.
Back in November, Apple warned customers and investors how the situation in China was limiting their ability to produce enough iPhone 14 Pro units to meet demand.
Today, TrendForce released a report with a revision of its estimate of how many iPhone 14 units Apple will sell in 2022 plus a forecast that Apple will struggle into 2023.
Since October, TrendForce says the Foxconn plant responsible for iPhone 14 production has not been above 70% of capacity utilization. While Foxconn has gotten help from another one of its factories, it apparently hasn’t been enough. “Given this situation, TrendForce has revised down its forecast for total shipments of all iPhone 14 models in 2022 to 78.1 million units.”
Looking ahead to Q1 2023, TrendForce also says there are labor shortage issues in China that started in December and “could get worse.”
With that in mind, the firm cut its Q1 2023 estimate for iPhone shipments down to 47 million units, which would be a 22% year-over-year decline.
“This has to do with the Chinese government making a significant change in its policy to deal with the COVID-19 outbreak and the general preparation for the upcoming Lunar New Year holiday. There are also signs that the labor shortage could worsen. Therefore, on on top of the various headwinds affecting the global economy, Apple is again facing a labor shortage limiting production of the devices.TrendForce has revised down its forecast for iPhone shipments (including all existing models) in 1Q23 to 47 million units, with a similar decrease of 22%.
1 trillion dollar drop
AAPL shares are down just over 3% so far today, with the stock hitting a new 52-week low of $125.92 in intraday trading.
That’s down from a 52-week high of just under $183 back on Jan. 3, 2022, when Apple became the first company to reach a $3 trillion valuation.
That puts the current total loss of AAPL value at $1 trillion for 2022, when the market cap is $2 trillion.
In particular, TrendForce says that Apple will not rely solely on Foxconn for iPhone Pro production starting with the iPhone 15 Pro Max.
“For years, Apple has outsourced the assembly of iPhone Pro models exclusively to Foxconn. However, due to the necessity of risk management, it has also been considered for some time to get another EMS provider for this task. Apple is said to have made the plan to use another EMS supplier besides Foxconn for the assembly of the iPhone 14 Pro models in the near future. This will serve as a trial run to diversify the partners and locations of iPhone production. Furthermore, due to the recent outbreak in Zhengzhou, Apple has taken the decision to use Luxshare as one of the assemblers for the upcoming iPhone 15 Pro Max. However, Luxshare’s only iPhone assembly factory is located in China. In Vietnam, Luxshare has a facility for assembling Apple-related accessories, but the company currently has no plans to set set up a new iPhone production line there.”
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