From Ming-Chi Kuo's Medium account:
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 protests
A. The production of the Zhengzhou iPhone plant was significantly affected by laborers’ protests, so I cut the 4Q22 iPhone shipments by about 20% to 70–75 million units (vs. the market consensus of 80–85 million units).
(1) The total iPhone 14 Pro and 14 Pro Max shipments in 4Q22 will be 15–20 million units less than expected.
(2) The average capacity utilization rate of Zhengzhou iPhone plant was only about 20% in November, and it’s expected to improve to 30–40% in December.
(3) Pegatron and Luxshare ICT have obtained about 10% of the iPhone 14 Pro and 14 Pro Max orders from Foxconn, respectively. But mass shipments will not be until late December at the earliest.
(4) According to the production recovery progress of the iPhone 14 Pro series, shipments in December were still significantly lower than expected.
B. Downside risks to Apple and the iPhone supply chain. Apple’s 4Q22 revenue and EPS have downside risks. Hon Hai/Foxconn is facing structural competition challenges, and iPhone component shipments may decline significantly in QoQ & YoY/HoH & YoY in 1Q23/1H23.
(1) Due to the high price of the iPhone 14 Pro series, Apple’s iPhone revenue in 4Q22 may be significantly lower than the market consensus by 20–30% or more.
(2) In addition to facing the challenge of lower-than-expected iPhone shipments/revenue in 4Q22, it will also be difficult for Hon Hai to continue to be the exclusive assembler of the iPhone 15 Pro series because Apple wants to diversify supply risks.
(3) iPhone 14 Pro series shipments in 4Q22 were significantly lower than expected, but component suppliers were generally not informed by Apple to cut orders, resulting in 4Q22 component inventory higher than normal for several weeks, which will lead to component shipments may have a more significant QoQ/HoH decline in 1Q23/1H23.
C. I believe that most of the demand for the 4Q22 iPhone 14 Pro series amid the economic recession will disappear due to the significant supply and demand gap rather than deferred.
My take: Less than who expected?
Any modicum of respect for his opinion, which was on life support previously, has now immediately reached a number below whale s### at the bottom of the ocean.
Where is the math behind a bald number like that? Ie “my toe feels right”, the rest is a similar piece of poor reporting that should belong in a regional rag (oops unintentionally insulting regional rags now)
In fact, there was a lawsuit a few years ago because some felt that Apple failed to alert them like this.
www (dot) reuters (dot) com/article/uk-apple-lawsuit-idUKKBN27L2HF
I don’t know what the guidelines are, I’m guessing that the corporate lawyers have been advising Tim about what he should or shouldn’t say in this circumstance.
Here is what we have seen. Google’s Pixel is taking share while Samsung is losing share. That makes since Google’s pricing was very aggressive and Samsung bet heavily on foldables, for which the folding feature costs a premium over similar spec’ed phones.
Less than Kuo’s nether regions, apparently…
(If you don’t put out your own numbers, then you can’t make any credible claims about ‘expectations’)
I can order a Pro model on Best Buy and have it in 5 days. I can order from Apple.com and it will be delivered by 12/29 (before the end of the quarter)
Apple did not announce the production issue until Nov 6th. Likely most of October was unaffected. I find it hard to believe Nov full-month was only 20% of capacity
I am not saying there will not a shortfall. But I do not see anything that points to 15-20 million units. If it is that big, I would expect Apple to release another statement with more details about the quarter and production status
Lost in the noise. Apple started this season’s iPhone launch 1 week early. That alone ameliorates any shortfall.
Apple’s production cycle is always front-loaded, hence the annual report of a (designed) “slowdown” being requested. Looking at orders, it appears that they’re less than 2 weeks behind schedule. My guess is that they miss 4-5 million iPhones this quarter, possibly less.
Things could certainly get better or worse between now and the holidays, but I suspect they’ll get better and Apple gets iPhones into the hands of everyone that wants one by 12/31. Regardless, Apple has other products to fill the potential small revenue void.
I wonder what was going on with Apple’s short interest before this report came out? The short interest could have been going up just based on the news reports of the past few days but I wonder if someone put an unusually large bet to the downside on Apple and Kuo is providing some cover there. If this report was true, then I would have expected another warning from Apple and Cook about the quarter, or maybe we will hear something soon. If the quarter is not all doom and gloom for Apple, should this call by Kuo be investigated?
Also, Kuo seems to be saying demand will be down secondary to 2 reasons. One, he says the phone is high priced(and adds that revenues will be down according to this-by my take, higher ASPs will moderate to a small degree the drop in phone availability). Two, he says demand will dry up because of the phone being unavailable. He does seem to be bringing out all his ammunition for this call.
I understand. But a 20 million phone shortfall this quarter with an ASP of $1000 is a 20 billion dollar shortfall for the quarter. That should be a material enough event that would cause Apple to have to announce it at some point in time before earnings. And you would think that if people believed this, the downdraft of the past few days would have become a hurricane.
If Ming-Chi Kuo isn’t shorting AAPL every time he says the sky is falling – which is his M.O. – then he’s either a BS artist or an idiot.
I mean, he must know a guy who knows a guy who is placing bets for him prior to him opening his pie hole. Off shore, of course.
That traders believe his hyperbolic forecasts, ostensibly empowering him to move AAPL down, I think is just so HFT algos can churn it.
What a racket.
Excuse my skepticism, but this guy is a cliché.