Chinese analyst sees iPhone 14 Pro demand “wiped out” in 4Q 2022.

Apple analyst Ming-Chi Kuo (TF International Securities) is out today with some new predictions on iPhone 14 Pro sales numbers. According to Kuo, Apple Inc’s “shipments in December are still significantly lower than expected.”

Based on developments in China, here’s what Kuo predicts :

1. The production of the Zhengzhou iPhone factory was significantly affected by the workers’ protests, so I revised down the 4Q22 iPhone shipment forecast by about 20% to 70-75 million units (vs. the market consensus of 80-85 million units).
   (1) The total shipments of iPhone 14 Pro and 14 Pro Max in 4Q22 were 15-20 million units less than expected.
   (2) The average capacity utilization rate of the Zhengzhou iPhone factory in November was only about 20%, and it is expected to improve to 30-40% in December.
   (3) Pegatron and Luxshare have obtained about 10% of the iPhone 14 Pro and 14 Pro Max orders from Hon Hai, respectively, but mass shipments will not be until late December at the earliest.
   (4) According to the production recovery progress of the iPhone 14 Pro series, shipments in December are still significantly lower than expected.
2. Downside risks to Apple and the iPhone supply chain. Apple’s revenue/EPS in 4Q22 has downside risks, Hon Hai is facing structural competition challenges, and iPhone component shipments may decline significantly in QoQ/HoH/YoY in 1Q23/1H23.
   (1) Due to the high price of the iPhone 14 Pro series, Apple’s iPhone revenue in 4Q22 may be significantly lower than the market consensus by 20–30% or more.
   (2) In addition to facing the challenge of lower-than-expected iPhone shipments/revenue in 4Q22, Hon Hai will also find it difficult to continue to be the exclusive assembler of the iPhone 15 Pro series because Apple wants to diversify supply risks.
   (3) iPhone 14 Pro series shipments in 4Q22 were significantly lower than expected, but component suppliers were generally not notified by Apple to cut orders, resulting in 4Q22 component inventory higher than normal for several weeks, which will lead to component shipments 1Q23/1H23 may have more significant QoQ & YoY/HoH & YoY recession.
3. During a recession, I believe that most of the demand for the iPhone 14 Pro series in 4Q22 will be wiped out rather than delayed due to a significant supply-demand gap.