Apple is predicted to earn $8 billion less in quarterly revenue off the back of selling 9 million fewer iPhones than expected because of China’s Covid lockdowns, analysts at Piper Sandler say.
The revenue and sales shortfall forecasts for the December quarter are the result of Beijing’s strict lockdowns crimping production at the world’s biggest iPhone factory in Zhengzhou, China.
The brokerage now expects $119 billion in revenue for the current quarter from an earlier projection of $127.3 billion, with iPhone unit sales of about 74 million against 83 million previously expected.
“More than 50% of assembled iPhones come from Foxconn’s Zhengzhou plant. The majority of the disruptions took place in the month of November where utilisation for the plant may have fallen to 50% or below,” the analysts said.
China’s manufacturing and services activities shrank further in November to seven-month lows, official data showed, stung by the country’s zero-Covid policy and rising infections that analysts said will hurt the economy well into 2023.
Production woes for Apple were heightened by a rare example of large-scale labour unrest in China, where Foxconn workers clashed with security personnel in Zhengzhou.
Apple might prioritise iPhone 14 Pro production over other models, the brokerage said, given the higher average selling price for the product.
- Reuters with additional editing by Sean O’Meara