Despite a 57% fall in iPhone shipments year-over-year in November, investment bank UBS continues to be optimistic about Apple’s revenue in the long run.
Supply issues in China unlikely to have a long-term impact on Apple’s iPhone shipments
It’s no surprise that the Cupertino tech giant has had a rocky couple of months due to COVID-19 lockdowns, subsequent protests, and widespread staff walkouts at Foxconn’s largest iPhone manufacturing facility in Zhengzhou. The most popular models from the iPhone 14 lineup, iPhone 14 Pro and iPhone 14 Pro Max, have been the most affected, seeing weeks-long shipping delays anticipated for current orders.
However, lead times for the iPhone 14 Pro models started seeing considerable improvements in late November. In addition, Foxconn is now operating at 90% of capacity at its main production facility with 200,000 people currently employed at the plant.
According to a new report from UBS (via AppleInsider), iPhone shipments have been considerably impacted by supply problems in China. Shipments of iPhones in November fell 57% year over year in China.
This contrasts with the overall Chinese smartphone market’s 36% annual decline brought on by supply chain problems. Accordingly, Apple will have an 11% market share of Chinese smartphone shipments in November 2022 as opposed to a 25% market share in October 2022, which is still higher than the long-term trend line of 10%.
According to estimates, 89% of shipments from China were made up of local brands in November, up from 75% in October. However, local shipments have decreased 25% year over year so far compared to a 13% reduction in iPhone shipments for the same period, emphasizing Apple’s expected market share increases in 2022.
According to UBS, the number of iPhone handsets shipped in China this quarter has decreased by 41% compared to the same period last year, to around 6 million. As a result, EPS forecasts for the December quarter are gradually becoming more de-risked.
In related news, the shipping forecast for the iPhone 14 series in 2022 has been reduced to 78.1 million due to the extensive issues brought on by China’s recent string of lockdowns.