Apple ran into challenges with iPhone 14 – particularly the Pro and Pro Max – this fall when a COVID-19 outbreak in China impacted its manufacturing partner Foxconn. Now the company’s stock has hit a 52-week low amounting to one trillion dollars in value lost as further forecasts for iPhone challenges have surfaced.
Back in November, Apple warned customers and investors about how the situation in China was constraining its ability to produce enough iPhone 14 Pro devices to meet demand.
Today TrendForce released a report with a revision to its estimate of how many iPhone 14 units Apple will sell in 2022 plus a forecast that Apple will struggle into 2023.
Since October, TrendForce says the Foxconn plant responsible for iPhone 14 production has not been above 70% of its utilization capacity. While Foxconn has had another one of its factories help, it hasn’t apparently hasn’t been enough. “Given this situation, TrendForce has corrected down its projection on the total shipments of all iPhone 14 models in 2022 to 78.1 million units.”
Looking into Q1 of 2023, TrendForce also says that there are labor shortage issues in China that started in December and “could get worse.”
With that in mind, the firm decreased its Q1 2023 estimate for iPhone shipments down to 47 million units, which would be a 22% drop YoY.
“This has to do with the Chinese government making a significant change to its policy for addressing COVID-19 outbreaks and the general preparation for the impending Lunar New Year holiday. There are also signs that the labor shortage could get worse. Hence, on top of the various headwinds that are affecting the global economy, Apple is again facing a lack of manpower that constrains its device production. TrendForce has corrected down its forecast of iPhone shipments (including all existing models) in 1Q23 to 47 million units, with the corresponding YoY decline coming to 22%.”
$1 trillion drop
AAPL shares have dropped just over 3% so far today with the stock price hitting a new 52-week low of $125.92 during intra-day trading.
Top comment by Triangulum
Unfortunately clickbait. Too easy to put "APPL Stock" but choosing instead the clickbait path.
This has much much less to do with iPhone sales. Off its high APPL stock has lost about 32% of its value as of today's closing. Amazon about 50%, Facebook about 65%, Google about 37%, Microsoft also about 32%. This is in large part because of interest rates. In the time of higher interest rates it typically puts downward pressure on what is called stock multiples(earnings per share times stock price). Apple was at a multiple of 32, Google 34, Microsoft 35, Meta 28, Amazon a crazy 130. These multiples are way!! down (the multiple changes as higher profits than last year are made).
That’s down from the 52-week high of just under $183 back on January 3, 2022 when Apple became the first company to achieve a $3 trillion valuation.
That puts the current total loss of AAPL value at $1 trillion for 2022 as the market capitalization sits at $2 trillion.
Diversifying production
Notably, TrendForce says that Apple will not rely solely on Foxconn for iPhone Pro production starting with the iPhone 15 Pro Max.
“For years, Apple has outsourced the assembly of iPhone Pro models exclusively to Foxconn. However, due to the imperative of risk management, getting a second EMS provider for this task has been under consideration for some time as well. Apple is reportedly to have made the plan of using another EMS provider besides Foxconn for the assembly of the iPhone 14 Pro models in near future. This will serve as a trial run for diversifying its partners and locations for iPhone production. Moreover, due to the recent outbreak at Zhengzhou, Apple has also made decision of employing Luxshare as one of the assemblers for the upcoming iPhone 15 Pro Max. However, Luxshare’s only iPhone assembly plant is located in China. In Vietnam, Luxshare has a plant for assembling Apple-related accessories, but the company currently has no plan for setting up a new iPhone production line there.”
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