Apple may sell less number of iPhone 14 units than expected, here’s why

The Covid-19 ‘situation’ in China

The last couple of months has seen severe lockdowns in China, especially in Zhengzhou — iPhone City — which have severely hampered Apple’s production plans. According to TrendForce, the outbreak in Zhengzhou was at its worst just as Apple was trying to ramp up sales of the new iPhone models for this year to a peak. Furthermore, the new Pro models have been in high demand, so Apple has kept raising their share in the overall iPhone production.
Apple’s biggest assembler is Foxconn, which also tried to ramp up production from its other major base located in the Chinese city of Shenzhen. “However, this move is still not enough to bring immediate relief to the current capacity crunch. Given this situation, TrendForcehas corrected down its projection on the total shipments of all iPhone 14 models in 2022 to 78.1 million units,” notes the report by TrendForce.
The report further says that China’s supply chain has started to experience a labour shortage this December. 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 labour shortage could get worse,” the report notes. Throw in the various headwinds that are affecting the global economy in the mix and “Apple is again facing a lack of manpower that constrains its device production,” as per TrendForce.

Apple looking to move out of China

Several reports have indicated that Apple wants to expand its production out of China and reduce its dependence on the country as well as on Foxconn. Reports have suggested that Apple may enlist Luxshare 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,” notes the report.
Further, TrendForce claims that Apple aims to double its device production capacity in India and have factories in Vietnam start making contributions by the middle of the year. “TrendForce believes that at least 30-35% of Apple’s entire device production capacity will have to be located in Vietnam and India.”