Daniel Ives: Apple facing 'major shortage' of iPhones this Christmas

Despite his estimated 5% cut in iPhone 14 supplies, Ives is sticking with his Street-high $200 price target.

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

We believe demand for iPhone 14 units into the all-important Black Friday holiday weekend is way ahead of supply and could cause major shortages leading into Christmas season. The zero Covid China shutdowns in Foxconn have been a major gut punch to Apple this quarter and we believe have taken roughly 5% of iPhone 14 units out of the supply chain and thus putting Cupertino in a "major shortage" heading into the next month. Many Apple stores and retailers are low on iPhone 14 inventory across the board as we believe for Black Friday weekend roughly 8 million iPhones will be sold down from 10 million in the year ago period with the gap being mostly supply driven... We believe by early December it will be increasingly difficult to get your hands on an iPhone 14 Pro with many delivery times likely pushed through to early January.

China production woes the albatross on the Apple story. After battling the macro headwinds and delivering a strong September quarter/guidance in a stark contrast to the rest of Big Tech, this latest zero Covid situation is an absolute body blow for Apple in its most important holiday quarter. With demand remaining firm into holiday season, we would estimate this negatively impacting roughly 5% of iPhone sales this quarter based on impacted China production/supply issues.

If Zhengzhou remains at lower capacity the next few weeks and continues to see the unrest build with workers, this would cause clear major iPhone Pro shortages into the all-important Christmas time period especially in the US. While not the news any bull wants to hear from Apple, it's a supply issue and related to China's zero Covid policy which is a very frustrating situation for Apple (and its investors) yet again, but not demand driven.

Maintains Outperform rating and $200 price target.

My take: Strong demand is small comfort when supplies are short.

7 Comments

  1. Christopher McManus said:
    Delivery dates for the 14 Pro and 14 Pro Max are already out to Jan 3rd for all colors and configurations.

    As of now (the day before Thanksgiving), all new orders are being pushed into Q2. Not good

    2
    November 23, 2022
    • Gregg Thurman said:
      As of now (the day before Thanksgiving), all new orders are being pushed into Q2. Not good

      Under promise, over deliver.

      Everybody is super focused on delivery estimates, and that is causing reductions in unit sales estimates. I’m not so sure it’s as bad as the media (never afraid to exaggerate) publishes. Makes me think of something Buffet said once (or twice): when everybody is screaming sell is when I’m buying.

      1
      November 23, 2022
  2. Romeo A Esparrago Jr said:
    I don’t know what those two images above are showing, Mr.Philip.

    4
    November 23, 2022
    • Steven Philips said:
      I’m guessing it’s showing a line of police manning a white barricade with a bunch of workers on the left heading towards it. (My eyesight makes me used to looking at things as a blur! 🙂

      0
      November 23, 2022
  3. Kemble Widmer said:
    I’m old enough to remember when “sources were saying” Apple was cutting back iPhone supply…

    1
    November 23, 2022
  4. Gregg Thurman said:
    How much you wanna bet the telephones between Cupertino and India have been working overtime?

    Apple can’t reduce its China reliance fast enough.

    0
    November 23, 2022

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