Two days later, Apple's shuttered Shenzhen iPhone factory is back up

"We suspect the site is operating at limited capacity." -- Analyst Amit Daryanani

From a note to Evercore clients that landed on my desktop Wednesday:

ALL YOU NEED TO KNOW: Foxconn has ramped back production at their Shenzhen site as of Wednesday (3/16) after having to shut-down the site on Monday (3/14) given the COVID outbreak in Shenzhen, China, according to WSJ and other news outlets. Foxconn has stated that it has been able to resume production by following local rules that allow businesses to operate if they set up a self-contained bubble-like environment and keep workers inside. While we suspect the site is operating at limited capacity it is important to note: a) the site accounts for a fraction (20-25%) of iPhone production, Apple’s main production site in Zhengzhou (aka iPhone City) has not been affected.

The Zhengzhou production site is ~2.3M sq. ft. vs 1.5M sq. ft. Shenzhen site (Shenzhen manufactures for several OEMs). It is estimated Zhengzhou site can manufacture ~50M iPhones /quarter (enough for a seasonally quiet time), b) the shutdown is occurring during a time when seasonal demand is lower, which should mitigate any impact, and c) Foxconn has implemented mitigation plans to shift production to other sites to limit disruption.

Net/net: Maintain Outperform and $210 target.

My take: Apple has already won back all that it lost on Monday.

4 Comments

  1. Fred Stein said:
    We have a good example of news vs. chart master. News wins this round.

    2
    March 16, 2022
    • Kirk DeBernardi said:
      Fred S. —

      If charts were so successful at foretelling the future, we’d all be rich, no?

      😉

      2
      March 16, 2022
  2. Timothy Smith said:
    China has herd immunity vaccination rate. This can’t be that serious.

    0
    March 16, 2022
    • Bart Yee said:
      They might have the vaccinated numbers of people, but considering how poor the Sinopharm and Sinovac vaccines are/were against alpha, and delta, it’s unlikely to very good against omicron. And we haven’t heard about how well or long it’s immunity lasts or whether boosters have been given with the same popularity.

      That is why China is still experiencing another Covid wave and why it’s leaders still have this kind of widespread response.

      2
      March 16, 2022

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