Demand for the new iPhone 14 is way ahead of supply heading into the Black Friday holiday weekend, according to Wedbush analyst Daniel Ives. This could lead to even worse shortages for the 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.
Despite inflation and economic difficulties, there has been strong iPhone upgrade activity at AT&T and Verizon. Additionally, sales have been solid for Apple in stores and online. However, Apple has already announced that the online order deadline for obtaining an iPhone 14 Pro or iPhone 14 Pro Max has passed. Delivery times are now pushing into January for those models.
Ives believes that China's zero COVID situation is a body blow for Apple in its most important quarter. He estimates that sales will be impacted negatively by 5% due to production and 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, its 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.
Wedbush maintains an OUTPERFORM rating on AAPL with a $200 price target.
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.
Despite inflation and economic difficulties, there has been strong iPhone upgrade activity at AT&T and Verizon. Additionally, sales have been solid for Apple in stores and online. However, Apple has already announced that the online order deadline for obtaining an iPhone 14 Pro or iPhone 14 Pro Max has passed. Delivery times are now pushing into January for those models.
Ives believes that China's zero COVID situation is a body blow for Apple in its most important quarter. He estimates that sales will be impacted negatively by 5% due to production and 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, its 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.
Wedbush maintains an OUTPERFORM rating on AAPL with a $200 price target.