Making Supply, Gauging Demand
JPMorgan Expects Fewer iPhone 14s Than iPhone 13s
After a day of fun in various realities, let us go back to the production line. Barron’s (via Apple News) ran a piece to end the week last week, that had JPMorgan indicating that “iPhone 14 Production Could Be Worse Than Feared.”
According to the piece, “Analysts led by William Yang said they have a more ‘conservative view’ on build estimates than what the supply chain expects.” Theirs is not the only conservative view, though. Last week, Bloomberg ran a piece calling for iPhone 14 production to be even with production of iPhone 13. Still, JPMorgan says that there will be fewer iPhone 14s than there were iPhone 13s. That’s reflective of “‘smartphone demand weakness’ and cost pressures,” according to the report.
Okay - is it that? Or is it continued trouble in the supply chain? That demand would be down in tough economic times seems sensible. But JPMorgan also says:
China’s manufacturing problems in the wake of strict lockdowns to prevent the spread of Covid-19 may hit output of Apple’s next iPhone worse than the industry expects…
So, which is it? One wonders whether both would kind of be a good thing. If demand is down but Apple is still unable to keep up with demand, that kind of looks good from the outside. You know - as long as revenue stays gold.
The Song That Never Ends: New for 2022!
Questions around the health of iPhone orders and manufacturing will likely go on and on and on until things are decidedly and obviously better. Late last week, TF International analyst Ming-Chi Kuo hinted at trouble for the Jesus phone, saying on Twitter that Apple has not changed its shipping plans, but adding that “iPhone 14's challenges will come from the demand side instead of the supply side.” The assumption is that that’s a sign of the times, not a sign of disinterest in iPhone.
See also: Samsung.
Report: Samsung Reducing Smartphone Plans by 30M Units
Over the weekend, TechCrunch ran a report saying that the Korean electronics giant has reportedly cut smartphone production by 30-million units. According to the piece:
It’s a perfect storm of industry and global factors that have gotten us to this place. It’s not panic time for the larger manufactures — they’ll almost certainly come out of the dip unscathed. But there are broader questions that remain about the industry going forward. Biggest of all is whether this is a lull following a decade of explosive smartphones sales, or whether not even the arrival of new technologies like foldable screens will kickstart a return to the mobile golden age.
You know, this sounds like a job for a whole new product category. Also, I really like that perfect storm idea.
Word of More Riotousness at Shanghai Quanta Facility
Economic uncertainty is far from the only issue kinking the supply chain. Business Insider (via Apple News) ran a piece to end the week last week, saying that Quanta workers have had another run-in with authorities over working conditions - namely being stuck there since the start of April.
Quanta, which makes MacBooks for Apple and other computers for other companies, has been able to keep running through various COVID-related lockdowns by employing a “closed loop” system. Basically, workers can go to their dorms or to work and that’s it. That seems to be taking a toll. Earlier this month we heard of a riot at a Quanta facility in Shanghai after workers weren’t allowed to return to their dorms. Now, Business Insider cites reports from regional media, saying:
A dispute over their captivity and pay prompted a large group of Quanta workers to (…) storm a dormitory housing the company's Taiwanese managers, resulting in a lengthy standoff…
Decidedly little else around that story, unfortunately. Though the Business Insider piece was only posted on Friday 27 May, the incident was said to have happened over the weekend of Saturday 21 May. Neither Apple nor Quanta offered comment for the Business Insider report.
Dives Talkin’
Pretty gloom and doom for the week’s second Monday, huh? How about a bright spot? Wedbush analyst Daniel Ives took to Twitter on the week’s first Monday to post of a supply chain upswing. In the first of a couple of Tweets, Ives said:
Over the last week including this weekend we are seeing from our checks a clear improvement in the supply chain in Asia for names like Apple and other chip players which is a much needed positive heading into 2H.
He went on to say in the second post:
While spots around zero Covid are popping up in China, we are seeing a strong production trajectory heading into June for stalwart names such as Apple (good for iPhone 14 ramp) and Tesla which are key barometers for the overall market on this painful hot button supply chain issue
Ives has a “Buy” rating on Apple shares. TipRanks puts his price target on the shares at $200.
