- Apple’s production of the iPhone 14, particularly the Pro and Pro Max models, was impacted by a COVID-19 outbreak at Foxconn in China, leading to a $1 trillion loss in value for the company’s stock.
- A recent report from TrendForce has revised its estimate for the number of iPhone 14 units that Apple will sell in 2022 and predicts that the company will continue to face difficulties into 2023.
- Apple is reportedly considering using another EMS provider besides Foxconn for the assembly of iPhone 14 Pro models and has decided to use Luxshare as an assembler for the upcoming iPhone 15 Pro Max.
- AAPL shares have reached a 52-week low and have lost a total of $1 trillion in value for the year 2022.
This fall, Apple faced difficulties with the production of its iPhone 14, particularly the Pro and Pro Max models, due to a COVID-19 outbreak at its manufacturing partner Foxconn in China. As a result, the company’s stock has reached a 52-week low and has lost a trillion dollars in value. There are also concerns about potential future challenges for the iPhone.
In November, Apple alerted customers and investors that its production of iPhone 14 Pro devices was being limited due to challenges in China, causing an inability to meet demand. A recent report from TrendForce has revised its estimation of the number of iPhone 14 units that Apple will sell in 2022 and also predicts that the company will continue to face difficulties into 2023.
iPhone production difficulties result in Apple’s trillion dollar loss in 2022
According to TrendForce, the Foxconn plant responsible for producing the iPhone 14 has not been operating at more than 70% of its capacity since October. Despite efforts by Foxconn to use another factory to increase production, it has not been sufficient. As a result, TrendForce has revised its projection for the total shipments of all iPhone 14 models in 2022 to 78.1 million units.
TrendForce also predicts that there will be labor shortages in China in Q1 of 2023, which began in December and may worsen. Based on this expectation, the firm has lowered its estimate for iPhone shipments in Q1 2023 to 47 million units, representing a 22% year-over-year decline.
“This has to do with the Chinese government making a significant change to its policy for addressing COVID-19 outbreaks and the general preparation for the impending Lunar New Year holiday. There are also signs that the labor shortage could get worse. Hence, on top of the various headwinds that are affecting the global economy, Apple is again facing a lack of manpower that constrains its device production. TrendForce has corrected down its forecast of iPhone shipments (including all existing models) in 1Q23 to 47 million units, with the corresponding YoY decline coming to 22%.”
AAPL shares have declined by approximately 3% today, reaching a new 52-week low of $125.92 during intra-day trading. This marks a significant decrease from the 52-week high of nearly $183 on January 3, 2022, when Apple became the first company to achieve a valuation of $3 trillion. The current market capitalization of AAPL is $2 trillion, resulting in a total loss of value of $1 trillion for the year 2022.
Revamping the production process
TrendForce reports that Apple won’t just depend on Foxconn for the production of its iPhone Pro models, 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 imperative of risk management, getting a second EMS provider for this task has been under consideration for some time as well. Apple is reportedly to have made the plan of using another EMS provider besides Foxconn for the assembly of the iPhone 14 Pro models in near future. This will serve as a trial run for diversifying its partners and locations for iPhone production. Moreover, due to the recent outbreak at Zhengzhou, Apple has also made decision of employing Luxshare as one of the assemblers for the upcoming iPhone 15 Pro Max. However, Luxshare’s only iPhone assembly plant is located in China. In Vietnam, Luxshare has a plant for assembling Apple-related accessories, but the company currently has no plan for setting up a new iPhone production line there.”