Apple’s (AAPL-US) iPhone delivery issues persist, but analysts are downplaying the potential long-term impact on Apple.
Foxconn in Zhengzhou had its production capacity greatly reduced due to epidemic prevention restrictions at the end of October, and many media reported that Foxconn workers protested their wages and working conditions. Apple said it was working hard to solve these problems. Neither Apple nor Foxconn responded to requests for comment.
Order the highest-end and most expensive Pro and Pro Max models of the iPhone 14 now, and you will have to wait until the end of the year to get them, while the more affordable entry-level iPhone 14 and iPhone 14 Plus models currently have no delay in delivery, but they are not as popular as Advanced models.
Evercore analyst Amit Daryanani rates Apple stock an “outperform” with a price target of $190. He believes delivery delays could push back roughly $6 billion in iPhone revenue in the December quarter to the March quarter. The iPhone accounted for $42.6 billion of Apple’s total revenue of $90.1 billion in the most recent quarter.
Coincidentally, Wedbush analyst Dan Ives also mentioned in a report on Friday that supply issues from China will negatively impact iPhone sales by about 5% this quarter. China’s “clear-to-zero” stance on the COVID-19 pandemic has been devastating to Apple’s supply chain, and the Zhengzhou Foxconn protests have dealt a blow.
Ives said that if the Zhengzhou factory’s production capacity remains below par and worker unrest intensifies in the next few weeks, there may be a significant shortage of iPhone Pro during the all-important Christmas period, especially in the US market. His price target for Apple is $200.
While iPhone sales will suffer, Daryanani doesn’t see long-term concerns for Apple shareholders as demand continues to be strong and contrasts sharply with concerns about an economic slowdown.
“The short-term extension of the lead time is unlikely to cause consumers to withdraw from the Apple system. We expect this demand to be delayed, not lost.” Daryanani pointed out that the current lead time for the Pro model is 37 to 42 days.
“Given the continued strong demand for iPhone 14 Pro/Pro Max, and the stickiness of Apple’s ecosystem, we continue to view this as a deferred revenue rather than a loss. Higher sales of Pro models could impact mix and margins Obvious positive impact.” He added that although the Zhengzhou factory still needs some time to resume normal operations, the delivery date of high-end models has stabilized.
Ives also takes a positive view of Apple’s situation, and they believe that Apple’s supply problems still come from the zero-clearing policy, rather than the decline in demand.
Apple (AAPL-US) closed down about 2% on Friday at $148.11 per share, down 17% so far this year.