Source: turmoil at Foxconn's Zhengzhou hub is likely to lower iPhone 14 Pro production by close to 6M units in 2022, potentially worsening if lockdowns continue

Turmoil at Apple Inc.'s key manufacturing hub of Zhengzhou is likely to result in a production shortfall of close …

Bloomberg 2022-11-28 Vlad Savov

Context & Ripple Effects

The disruption has progressed from lockdown measures during a critical ordering period to Apple’s warning that iPhone 14 Pro and Pro Max shipments would undershoot expectations. The reported near-6 million-unit production gap puts a scale on the exposure created by Zhengzhou’s interruption.

Foxconn’s Zhengzhou operations are a key production point for Apple’s premium iPhones, so a prolonged shutdown turns a local labor and lockdown problem into a product-availability constraint for Apple.

First-order effects

Apple faces a shortfall of close to 6 million iPhone 14 Pro units in 2022, with the reported gap increasing if Zhengzhou lockdowns persist.
Foxconn loses output at its Zhengzhou hub just as Apple had already flagged lower-than-expected Pro-model shipments.

Second-order effects

Apple’s premium iPhone shipments become constrained by available production rather than solely by demand, narrowing the inventory available to its sales channels.
The episode reinforces the operational pressure on Foxconn to restore Zhengzhou production after the weekslong outbreak and lockdown response disrupted a crucial ordering window.

Third-order effects

Repeated iPhone production interruptions—from earlier supplier slowdowns to Zhengzhou’s lockdowns—make concentrated manufacturing capacity a continuing supply-chain risk for Apple and Foxconn.
If production recovery remains dependent on a single hub’s operating conditions, device launches and seasonal shipment plans will remain exposed to localized disruptions rather than broad market demand.

The trend: Premium-device supply chains are being shaped by capacity concentration, where disruption at one major assembly hub can constrain global shipments.

Discussion

@nytimes @nytimes on x
Rare nationwide protests have broken out in multiple cities in China. Many demonstrators expressed frustration over stringent Covid lockdowns, while others demanded freedom of speech and even the removal of China's leader, Xi Jinping. https://www.nytimes.com/... https://twitter.c…
@pelstrom Peter Elstrom on x
Scoop: Apple faces a shortfall of close to 6 million iPhone Pro units this year because of turmoil in Zhengzhou, its most important manufacturing hub. Violent protests have broken out over Covid restrictions and compensation policies. https://www.bloomberg.com/...
@profdaveandress David Andress on x
There was a terrible shortage of coffee in France after the enslaved population of Saint Domingue revolted in 1791... https://twitter.com/...
@pelstrom Peter Elstrom on x
The situation remains fluid and the estimate of lost production could change. Much will depend on how quickly Foxconn, Apple's assembler, can get people back to factory lines after the protests. If lockdowns continue in the weeks ahead, production could be set further back.
@pelstrom Peter Elstrom on x
The Foxconn facility produces the majority of iPhone 14 Pro and Pro Max devices, Apple's most in-demand handsets. Those phones picked up the slack for weak demand for the regular iPhone 14 models. Apple lowered its overall production target to 87 million units from 90 million.
@pelstrom Peter Elstrom on x
Apple and Foxconn increased their estimates of the Zhengzhou shortfall over the past two weeks due to growing disruptions, said the person. Apple shares fell in European trading.
@carnage4life Dare Obasanjo on x
Is it me or is it really odd that Apple hasn't made an official statement about violent protests at the largest iPhone factory? Media coverage focused on how many fewer iPhones will be sold sounds like capitalism at its worst. https://www.bloomberg.com/...
@pelstrom Peter Elstrom on x
“Silence speaks louder here, those who understand know.” China's censorship machine kept a lid on dissent for years, but protests are now breaking through after Covid lockdowns and a fire that killed at least 10 people. @xzibang @LucilleLiu https://www.bloomberg.com/...
@diegoescosteguy Diego Escosteguy on x
“With pushback against China's Covid containment policies sweeping the country on the streets and in social media, the battle between online users and censors has gone into overdrive, forcing people to develop novel strategies to circumvent censorship.” https://www.bloomberg.com/…
@dillidurast Shivam Vij on x
“In a more intellectual twist, some students from the university held up pieces of paper bearing the Friedmann Equations, cosmological expressions that measure the rate of expansion of the universe — a veiled reference to the inevitability of opening up.” https://www.bloomberg.co…
@marikakatanuma Marika Katanuma on x
here's a piece on China's vast censorship operation: “'Good good good good good good good good' may not seem like words written in anger, but in China this can be a serious public display of discontent.” https://www.bloomberg.com/...
@thomdunn @thomdunn on x
Is the “problem” a basic disregard for workers rights? If only there were some way to treat your workers better! https://www.cnn.com/... https://twitter.com/...
@zen_options Gregory on x
“Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he said. $AAPL hmmm https://www.cnn.com/...
@aadilbrar Aadil Brar on x
“According to several employees who spoke to the South China Morning Post, concern about the virus started to spread when the factory imposed daily PCR testing requirements on workers starting October 10” https://www.scmp.com/...
@royprice Roy Price on x
Shocked this is happening at Foxconn's plants in China. And further surprised that it is being reported. https://twitter.com/...
@carnage4life Dare Obasanjo on x
The economic impact of China going on almost 3 years of COVID lockdowns is a topic that isn't discussed much but continues to impact the world economy. That China can't or won't purchase Western vaccines but instead is completely reliant on lockdowns which have failed is tragic. …
@biancoresearch @biancoresearch on x
Has Tim Cook commented on this? Because this is devastating as it makes Apple complicit in a massive human rights abuse. If this was not the manufacture of iPhones, Apple employees in Cupertino would be organizing a boycott of this product as we speak. https://www.bloomberg.com/.…

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