Apple said the latest shipments iPhone phones It will be lower than previously expected after shutdowns in China affected operations at a supplier’s plant.
Despite Apple’s statement about the iPhone production problem, other reports have pointed to a problem in demand for models that are manufactured outside of Foxconn’s facility in China.
And the agency “Bloomberg” reported that Apple expects to lose about 3 million iPhone 14 devices in production this year, according to what it quoted as sources, and was seen by “Al Arabiya.net.”
The company and its suppliers now aim to make 87 million devices or less, the sources said, compared to a target of 90 million units earlier. The drop is primarily due to weak demand for the iPhone 14 and 14 Plus models, which are cheaper alternatives to Apple’s flagship iPhone Pro. This comes on top of supply problems in places like Zhengzhou, which is home to a major iPhone assembly site and is undergoing a week-long shutdown due to COVID-19.
It comes as sales of the iPhone 14 and Plus have slowed rapidly since its launch, and the slowdown is deepening in China, according to an analysis by investment bank Jefferies, the world’s largest smartphone market. While Bloomberg News reported that Apple previously canceled plans to increase production of its new iPhones this year after the failure of the expected increase in demand on the ground.
However, Apple said on Sunday that demand for its iPhone 14 Pro and Pro Max devices remains strong, even though production of these phones will be halted due to the shutdown in Zhengzhou.
For its part, SMBC Nikko analysts, led by Rusuk Katsura, lowered their overall forecast for Apple production in 2022 to 85 million new iPhones from 91 million units. Their revised forecast actually increases the expected production of the iPhone Pro models, but reduces the standard versions by a larger margin.
“Some companies are beginning to consider the potential impact of these changes on their earnings forecasts,” Katsura and colleagues wrote in a note to clients. They revised their forecasts after “confirmation this week of production and sales corrections in China and the appearance of signs of production cuts in some material makers.”
The Zhengzhou facility, operated by Foxconn Technology Group and also known as iPhone City, is Apple’s main production center for assembling Pro versions of its iPhones. It is the site that has become a center for mass worker flight due to Foxconn’s management of the coronavirus outbreak at the factory.
In turn, the Taiwanese assembly company raised wages and took additional measures to improve worker welfare, which Apple has said is its top priority.
This was followed by the Chinese government’s lockdown of Zhengzhou, which lasted for a week until November 9, and Foxconn now says it is working closely with the government to stem the epidemic and reduce disruption.
Apple, the world’s most valuable company, said last month that it expects growth to slow for the time being.
The Cupertino, California-based company did not provide a specific revenue forecast for the current quarter.
But analysts estimate sales at $128 billion, an all-time record.
Faced with slowing growth, Apple has paused hiring in many jobs outside of research and development, an escalation of an existing plan to cut budgets heading into next year, Bloomberg reported last week, citing people familiar with the matter.
Meanwhile, the Foxconn plant continues to operate in a “closed loop” or self-contained bubble that limits contact with the outside world, keeping some production running.
Apple’s biggest problem in the coming weeks may be falling demand for the iPhone, not supply. China’s strict zero-Covid policy has led to sudden shutdowns across the country, hampering economic activity.