According to a note released by the firm’s analysts, Morgan Stanley’s Greater China Tech HW team believes the incremental iPhone production shortfall from the news could amount to just 1-2M units in the Dec quarter. The note followed reports that Apple (NASDAQ:AAPL) full iPhone production at Hon Hai’s Zhengzhou Park is likely to resume at the end of December or early January.
That might work out far better than many predicted.
“The full capacity of Hon Hai’s Zhengzhou factory to produce iPhones has reportedly been delayed by three to four weeks. While reporting November earnings this morning, Hon Hai (covered by Sharon Shih) revealed that COVID controls would delay iPhone production at Zhengzhou Park until the end of December or the beginning of January 2023, despite earlier expectations that total production would begin in late November or early December “said the researchers’ writing.
Although production at the world’s giant iPhone manufacturing factory is beginning to resume and new employees are being hired, it may be another three to four weeks before the facility operates at total capacity.
Morgan Stanley’s Greater China Hardware team, led by analyst Sharon Shih, said that on the plus side, Hon Hai maintained their December quarter revenue outlook, suggesting that the additional effect to December quarter iPhone manufacturing “may amount to approximately 1-2M units” above the “initial 6-7M unit impact we’ve already incorporated in our December quarter predictions.”
“That means the shortfall in December quarter iPhone manufacturing is likely to be between 7 and 9 million units, down from the original 15 million plus units that were feared in the worst-case scenario. We predict a more cautious 78.5 million iPhone shipments for the December quarter. In contrast, Sharon predicts 79 million iPhone builds, suggesting 81.4 million iPhone shipments, “experts drew their conclusion.
Apple stock is now down 0.5% as of this writing.
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