Evercore's Amit Daryanani: Apple iPhone lead times inching downward

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

ALL YOU NEED TO KNOW: On November 6th, Apple filed an 8-K with the SEC, stating that COVID-19 restrictions in Zhengzhou, China have temporarily impacted production of the iPhone 14’s Pro models. According to the filing, iPhone’s major assembly facility in the city, which is their main production hub, is operating at “significantly reduced capacity.

We estimate the shutdowns will have a 5-8M unit impact, but buyside expectations seem to be closer to a ~10M impact, with downside to ~15M. We would note that the production delays associated with China’s zero-covid policy will likely serve to accelerate the diversification of Apple’s supply chain outside of China towards a more resilient model insulated from single- country shocks.

Net/net: Lead times for the more in-demand high end models have come in by ~2-3 days on average wk/wk. Given the resilient consumer appetite for the iPhone 14 Pro models and the stickiness of the AAPL eco-system, we reiterate our view that the production delays have resulted in revenue deferral vs. demand destruction. Higher sales of the Pro models will likely have a notably positive effect on both mix/margins.

Maintains Outperform rating and $190 price target. 

My take: From 5 million to 15 million is quite a gap. I wonder what -- if anything -- the buyside knows that the sellside doesn't?

5 Comments

  1. Hap Allen said:
    PED: As the first images on our retinas when we load an article, your photo choices alone are worth the price of admission. TNX.

    I don’t think that inchworm is in any hurry to get where we know he’s going.

    2
    December 9, 2022
  2. Fred Stein said:
    Ignore all but, maintains PT.

    Without knowing demand, lead times don’t reveal that much.

    And why is anyone still counting iPhones on a quarterly basis, no less? As Amit says, ‘no demand destruction.’

    2
    December 9, 2022
  3. Bart Yee said:
    “My take: From 5 million to 15 million is quite a gap. I wonder what — if anything — the buyside knows that the sellside doesn’t?”

    IMO, the buyside (includes firms that purchase securities – investment managers, pension funds, and hedge funds) wants securities to be cheaper, hence the pessimistic news views. The sellside (refers to firms that issue, sell, or trade securities, and includes investment banks, advisory firms, and corporations) wants securities to be more expensive, hence the more optimistic news view.

    This would explain a lot when listening to the various analysts and principals who speak or represent the views of their respective firms.

    corporatefinanceinstitute dot com
    /resources/career/buy-side-vs-sell-side/

    1
    December 9, 2022
  4. Roger Schutte said:
    I built an iPhone 14 Pro order at Apple.com today and found some configs of different colors and storage sizes available at Apple stores. Home delivery slipped a few days to Jan 4 from Dec 30 when I did this exercise earlier this week. Not sure but maybe this means shipments to carriers are catching up and excess product is now going to Apple stores.

    4
    December 9, 2022
  5. Neal Guttenberg said:
    Analysts were overly positive, then became overly negative, and now seem to be going back to being cautiously positive all the while hedging their bets. Makes me feel that nobody outside maybe a few people in Cupertino know what is really going on and the rest are just guessing because that is what they are paid to do.

    4
    December 9, 2022

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