Apple iPhone shipments will arrive late as China COVID curbs carry on

Apple has said it's looking at fewer iPhone 14 shipments than expected, meaning iPhone orders will be backed up.

Apple iPhone shipments will arrive late as China COVID curbs carry on
People walk near a display advertising the Apple iPhone 14 outside its store, following the coronavirus disease (COVID-19) outbreak in Shanghai, China, November 7, 2022. REUTERS/Aly Song

Foxconn, the world's biggest iPhone factory in Zhengzhou, China, has been through a lot over the past few weeks – workers were fleeing on foot because of strict COVID measures, and China's lockdown in Zhengzhou last Wednesday has it operating at a reduced capacity. The factory makes 70% of global iPhone shipments. So, to meet the high demand for the latest iPhone, it's been operating under a closed-loop production system and self-contained bubbles since October. But with the tightening COVID policy outlook in China, iPhone output could slump by up to 30% in November, according to an insider.

So, Apple has said it's looking at fewer iPhone 14 shipments than expected, meaning iPhone orders will be backed up. According to the Apple website, customers are looking at late November or early December to receive the iPhone 14 Pro.

And now, Foxconn is offering a one-time bonus of 500 yuan (US$69.28) for workers who left to come back. Apple said it's working closely with the government to return the factory to a standard production level and ensure the health and safety of its workers.

Key comments:

"We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated," Apple said in a statement.

"Foxconn is now working with the government in concerted effort to stamp out the pandemic and resume production to its full capacity as quickly as possible," stated Foxconn.

"Anything that affects Apple's production obviously affects their share price…" said Quincy Krosby, chief global strategist at LPL Financial. "But this is part of a much deeper story – the uncertainty surrounding the future of the Chinese economy ... These headlines are part of the ongoing saga as to whether there is any truth to the consistent rumours that authorities are discussing whether some of the measures will be lifted in the first quarter."

"The weak export growth likely reflects both poor external demand as well as the supply disruptions due to COVID outbreaks," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.