We begin with Apple issuing an iPhone supply warning due to COVID lockdowns and restrictions at the largest iPhone production facility in China. After going over Neil’s thoughts on the news, we take a closer look at the timeline of events to obtain a better handle of the situation and what Apple may have known and when. The discussion concludes with a look at how the lockdown may impact 1Q23 iPhone sales.

Hello everyone. Welcome to a new week. Let’s jump right in.

Apple Warns on iPhone Supply

In a press release issued yesterday, here's Apple:

“COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China. The facility is currently operating at significantly reduced capacity. As we have done throughout the COVID-19 pandemic, we are prioritizing the health and safety of the workers in our supply chain.

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 and customers will experience longer wait times to receive their new products.

We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker.”

Zhengzhou is responsible for an estimated 50% of Apple’s iPhone production. While Foxconn’s smaller facilities in China, including Shenzhen, battled COVID outbreaks and lockdowns earlier this year, Zhengzhou had managed to escape major lockdowns and interruptions until now.

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