Manufacturing millions of mobile phones every month may appear to be a simple task for large manufacturers if everything goes smoothly. When this is not the case, as we have seen with Apple recently, the consequences can be fatal. And it appears that production of the iPhone 14 will get a significant reduction.
So, in today’s globalized world, if China catches a cold, the ramifications for the rest of the markets can be significant. And this is what is happening now with Apple, which may have to halt production of its most advanced iPhone. This did not happen not even available during the first years of the pandemic.
Apple has been forced to stop iPhone 14 Pro production
That is what the Californian company has stated, which is extremely unusual. Because it has issued a statement stating that the pandemic, which is still affecting parts of China. It will have a significant impact on the production of the iPhone 14 Pro and 14 Pro Max. The most advanced models of the iPhone 14 are made in Foxconn’s factory in Zhengzhou, China. And this has been impacted by significant restrictions imposed to control the virus’s spread.
As you may be aware, China’s zero COVID policy is the most stringent on the planet, forcing entire cities to close when only a few cases of the virus are detected among the population. In this case, Apple has had to announce that as a result of the situation. “the facilities are currently operating with a significantly reduced capacity,”. This means that production of the brand’s two most advanced models will be significantly reduced. drastic.
As is customary, the health of the workers in these factories takes precedence over pure business. And as a result, Apple already knows that meeting sales targets in the coming months will be difficult. If not impossible. as a result of this reduction in production in its Pro models. We should note that Apple has never made an announcement of this nature before. So we understand that the situation must be serious enough for them to make the decision to make it public.
There will be an iPhone 14 Pro shortage
This logically implies that the iPhone 14 Pro and 14 Pro Max will be less available in the coming weeks and months. This could imply a certain scarcity of these models for the following Christmas. Despite this announcement, Apple assures that demand for its iPhone 14 Pro and 14 Pro Max remains strong. And they do not want to associate this production cut with the demand issues that other models are experiencing.
For example, the iPhone 14 standard and Plus models. For the time being, this situation will persist as long as China maintains its zero COVID policy. On which production is increasingly dependent not only on Apple, but also on many other companies.
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Apple is still looking for production alternatives
It is not the first time we have mentioned that Apple is considering producing some of its devices outside of China. Indeed, it has already relocated some of its iPhone and iPad production to countries such as India. Which appear to be the best place to host the production that has been moving from China. And it is becoming increasingly difficult for Apple to maintain a sufficient and consistent rate of production. With its Chinese factories over time. Asian anti COVID policies are stifling production. And, ultimately, the firm’s ability to meet its own financial goals, if everything is dependent on the health situation.
And it is the fact that Californians have more than 90% of their total device production in China. Making them especially vulnerable to future episodes like the ones they are currently experiencing with their most advanced models. According to Counterpoint, one of the most influential market consultants, “Almost all of Apple’s production is taking place in Zhengzhou,”. Making Apple an extremely vulnerable company in this particular case of confinement. To get a sense of the true magnitude of Zhengzhou, consider that this factory can house up to 300,000 people. Who live in its vicinity all year round, making it a true city that can become very vulnerable to contagion.
The shortage impact on Apple
Analysts like Ming-Chi-Kuo and Counterpoint’s Ivan Lam agree that. While the impact of this scale may be limited for Apple. Chinese producers must improve their production systems to make them more efficient and cost effective. Such situations make you vulnerable. If they do not, they risk forcing not only Apple. But many other companies that have almost all of their production in the Asian country. To move it out of China to other close countries that are less restrictive with COVID. Or that they have simply managed the pandemic better.
Analysts believe that this is a major destabilizing factor for Apple. Which may suffer long-term consequences as a result of these incidents. Furthermore, not only because of COVID. But also because of the tense commercial relations between the United States and China. Which could also affect Apple in the long run. Having already made the decision to move part of its production to other countries for this reason. The potential customs conflicts that could arise in the future if the United States vetoes more companies. As it did with Huawei and dozens of other Chinese companies. Undoubtedly a wake-up call for Apple, which we are sure is already considering alternatives. To avoid an iPhone shortage that could ruin its Christmas campaign in the future. However, we will keep tracking the development of events and keep you updated in this regard.