iPhone City exits lockdown, but iPhone 14 Pro supply issues will continue
The iPhone 14 Pro and iPhone 14 Pro Max are highly coveted Christmas gifts, but it’s nearly impossible to get one for December 25th. Demand for the handsets was high since the early September launch, and Apple never caught up with it. Then, in early November, the iPhone City in Zhengzhou was placed under lockdown after a COVID wave swept the area.
After a tumultuous month that saw violent protests at the site of the largest iPhone assembly factory in the world, the lockdown ended. That’s good news for Apple, which can work towards resuming iPhone 14 Pro production. But don’t expect any Christmas miracles, as the iPhone maker is far from being ready to meet demand.
Foxconn’s iPhone City is home to about 200,000 workers who manufacture Apple products, especially iPhones. The lockdown impacted iPhone operations in early November when Apple announced that supply will be constrained as a result.
In the following weeks, iPhone 14 Pro models saw delivery estimates extend well beyond Christmas. According to recent estimates, supply has been improving, but iPhone buyers worldwide would have to wait more than a month for an iPhone 14 Pro or Pro Max delivery.
The lockdown affecting iPhone City led to tensions and a violent workers’ revolt. Employees complained that the hiring bonuses Foxconn promised new hires were not paid. This led to clashes with security officers before Foxconn offered the employees cash to quit and leave. Thousands of people left the company, which further strained iPhone production.
Apple and Foxconn can resume normal operations now that the lockdown has been lifted in Zhengzhou. “This is some good news in a dark storm for Cupertino,” Wedbush Securities’ Daniel Ives told CNN. “There is a lot of heavy lifting ahead for Apple to ramp back up the factories.”
The analyst estimates that the supply disruptions at Foxconn’s iPhone City cost Apple about $1 billion a week in lost iPhone sales. The iPhone 14 Pro and Pro Max are the most expensive models in the iPhone 14 lineup. And they’ve been the most popular with consumers since launch.
Ming-Chi Kuo said in a recent note that iPhone estimates might be 20% lower than expected in the December quarter following the lockdown in Zhengzhou. The average capacity utilization of the factory was only about 20% in November. This should grow to 30%-40% in December.
The analyst explained that Apple would manufacture 15 million to 20 million fewer iPhone 14 Pro and Pro Max units during the December quarter. This will impact Apple’s earnings for the period significantly. Apple’s revenue might take a hit between 20% and 30% for the holiday quarter.
Buyers looking for a new iPhone for Christmas can still purchase the iPhone 14 or iPhone 14 Plus, which will ship in time for the holidays. They might not be iPhone 14 Pros, but they’re still great flagships.
