Lower capacity utilization reduces expected delivery of iPhone…

This event thus directly affected the performance of the iPhone production lines deployed within the base. In its latest survey of the event, TrendForce finds that capacity utilization rates on iPhone production lines have rebounded to around 70% as local outbreaks are gradually brought under control.

However, getting their capacity utilization rate back to normal will still be difficult in the short term. The Zhengzhou base is Foxconn’s main production center for the iPhone Pro and Pro Max models. Additionally, the order flow for the Pro Series is now at its peak. Consequently, iPhone shipments will be lower than expected for 4Q22. Originally, the fourth-quarter iPhone shipment target was set at 80 million units. Due to lower production line capacity utilization rates in Zhengzhou, total quarterly iPhone shipments are now expected to fall by 2-3 million units. As for total iPhone shipments this year, they are now targeted at around 237 million units.

Due to the impact of China’s dynamic Zero-COVID policy, 1Q23 iPhone shipments may see another downward correction

Looking ahead to 1Q23, the economic outlook for the period is already quite pessimistic. In addition, the winter season is generally conducive to the spread of diseases such as COVID-19. Therefore, it is possible that China will adopt zero COVID lockdowns at a more frequent pace in the future. Such a scenario would extend the effects of this policy on the demand side and disrupt Apple’s iPhone production plan for this quarter. TrendForce research reveals that Chinese domestic demand accounts for around 20% of overall iPhone sales. Assuming that the future performance of the global economy is not particularly positive, the effects of China’s “zero COVID dynamic policy” on supply and demand will likely lead to a downward correction in the quarterly target. iPhone shipping. Currently, iPhone shipments are expected to reach 52 million units for 1Q23. However, TrendForce does not rule out a downward correction of 4-6 million units. Additionally, the year-over-year drop in iPhone shipments for 1Q23 could be further widened to more than 20%.

TrendForce’s investigation also indicates that Foxconn’s production of the Pro and Pro Max models will continue to run exclusively on the Zhengzhou base in the near term. However, Apple plans to spread the risk of producing the iPhone Pro series by diverting orders to Luxshare and Pegatron. Luxshare should first benefit from the subsequent order transfer, and shipments of iPhones made on its production lines could begin as early as 1Q23. Even though iPhone demand will be much weaker during this period, the staggering of orders will help Apple in its plan to hire other EMS vendors for the next iPhone Pro series and reduce the risk of over-reliance on a single production site to manufacture certain models of devices.

For more information visit TrendForce