Apple Facing iPhone 14 Pro Shortfall of 15-20 Million Units in Q4, Predicts Kuo

Apple will see a deficit of 15-20 million iPhone 14 Pro and iPhone 14 Pro units during the fourth quarter due to recent worker unrest and protests at supplier Foxconn’s largest iPhone factory in China, according to information from TF International Securities analyst Ming-Chi Kuo (@mingchikuo).

The total iPhone 14 Pro and 14 Pro Max shipments in 4Q22 will be 15–20 million units less than expected. Significant downside risks to Apple & iPhone supply chain due to Zhengzhou iPhone plant labor protestshttps://t.co/tUkKE9TGVG

— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) November 29, 2022

Foxconn’s plant in Zhengzhou, which is often referred to as “iPhone City” due to its contribution to Apple’s supply chain and the sheer volume of iPhones it produces, has seen worker protests erupt due to COVID-19 restrictions and delayed bonus payments.

Kuo’s tip follows a Monday report that indicated the production slowdown at Zhengzhou would wipe about six million iPhone 14 Pro units from Apple’s supply this quarter. The analyst, however, has cut his iPhone shipment forecast for Q4 by 20% to 70-75 million, against a market consensus of 80-85 million.

According to Kuo, Foxconn’s average capacity utilization rate for its Zhengzhou iPhone plant was merely 20% in November and will only go up to 30-40% in December.

The supply shortfall couldn’t have come at a worse time for Apple, given that Q4 has historically been the iPhone maker’s biggest quarter of the year thanks to the holiday season.

iPhone 14 Pro models currently have a four-week wait time on Apple’s online store in the U.S., and the ongoing supply crunch from China could prevent that from getting better anytime soon.

While Kuo has learned that about 20% of Foxconn’s iPhone 14 Pro orders have been handed off to fellow Apple suppliers Pegatron and Luxshare, mass shipments aren’t expected to begin until late December at the earliest.

The analyst believes that the production bottleneck in China could result in Apple’s iPhone revenue for Q4 being “significantly lower than the market consensus by 20–30% or more.”

Kuo further speculated that due to the lengthy shipping delays and worsening economic conditions across the globe, most of the iPhone 14 Pro demand for this quarter could simply “disappear” instead of potential customers who can’t buy one right now coming back to order one in January or later.

The situation at Foxconn’s Zhengzhou plant could begin to improve soon, with the local government lifting its stricter COVID-19 prevention measures on Tuesday. How long before that translates to an improvement in Apple’s iPhone 14 Pro supply, however, remains to be seen.