China Lifts Lockdown on iPhone City [Report]

China has lifted its lockdown on Zhengzhou, also known as iPhone city, which has caused an unprecedented global shortage of iPhones.

Wedbush analyst Daniel Ives estimates that Foxconn's plant in Zhengzhou has been operating at just 20-30% of capacity over the past month. This has led to shortage that started out at 3% of iPhone 14 Pro units to 5% last week and now roughly 10%+ of overall units.

Apple watching China train wreck with minimal options on the table for now. Apple has minimal options to resolve this train wreck of a situation in the near-term for Cupertino, which until now has been Teflon-like navigating the head scratching zero Covid policy in China the last few years. We estimate demand vs. supply from consumers around iPhone 14 Pro are currently at a 3:1 ratio as many Apple stores, retailers, and online channels are looking empty handed for most iPhone 14 Pro models until at least early to mid January. We could see some consumers trade down to the base model iPhone 14 or iPhone 14 Plus, however our expectations is that roughly 10 million to 15 million iPhones (and potentially more) will move from the December quarter into the March quarter as supply starts to ramp back up over the coming weeks (assuming no more China shutdowns and protests).


Ives says that the zero China Covid policy has been a gut punch to Apple's supply chain, further complicated by the worker protests at Foxconn. The reality is that Apple's dependence on China for production and parts puts them at the mercy of the Chinese government. Hopefully, this is a wake up call that accelerates efforts to move global production to India, Vietnam, and America.

Despite brutal supply shortages, Webush maintains its OUTPERFORM rating and $200 price target for Apple.

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