Apple shares fell nearly 2% in US premarket trading Monday on news that unrest at the world’s largest iPhone factory in central China could result in a production shortfall of iPhone Pro units this year, according to Bloomberg, citing a person familiar with assembly operations.
The person said Apple’s manufacturing partner Foxconn Technology Group’s factory in Zhengzhou, could wind up with a 6 million iPhone Pro production shortfall by the end of the year, adding the situation remains fluid and lost production numbers could change.
A lot will depend on how fast Foxconn can hire new workers and revive full capacity on assembly lines after weeks of unrest at the plant over Covid restrictions and disputes about pay. Thousands of workers were given $1,400 to leave the plant last week, a move by Foxconn to quell the unrest. Still, the Covid situation in China is worsening, and lockdowns in the weeks ahead could create even more production woes.
News of Apple facing a 6 million iPhone deficit sent shares lower this morning, down nearly 2% as of 0630 ET.
Bloomberg’s breakdown of Apple’s supply chain shows Foxconn (otherwise known as Hon Hai Precision Industry Co., Ltd.) is a top supplier. Any manufacturing disruption in China could leave AT&T, Best Buy, and Verizon stores without iPhones.
The facility produces most of the iPhone 14 Pro and Pro Max devices, Apple’s most in-demand devices this year. However, sales for the premium iPhones have rapidly cooled, and Bloomberg reported earlier this month that Apple lowered overall production targets to 87 million devices or fewer, compared with a target of 90 million units earlier.
“It demonstrates that everyone, even Apple, is susceptible to supply-chain constraints in China due to Covid,” said Anshel Sag of Moor Insights & Strategy.
Morgan Stanley analysts recently estimated the iPhone Pro model shortfall would be around 6 million, but such a forecast was made before the unrest at the plant.