The noise from Foxconn’s largest iPhone plant gets louder, Apple’s “supercycle” for hardware, and Apple TV+ has a new podcast.
iPhone Noise Gets Louder as Foxconn COVID Concerns Grow
I said on Tuesday’s Daily Observations Podcast from The Mac Observer that today’s news felt like Monday’s news, but louder. Like echos, except growing in volume, not receding.
Really, that started last week with reports in the South China Morning Post and CNBC that talked of a “small” outbreak of COVID-19 at the “iPhone City” Foxconn plant in Zhengzhou, China. Mid-week last week, a Foxconn spokesperson said work in the facility was “relatively stable with health and safety measures for employees being maintained.”
That didn’t last the week. The BBC (via Yahoo! News) ran a report Sunday saying that some employees at Foxconn’s Zhengzhou plant had been seen jumping fences and beginning the long walk home. Having broken quarantine, they couldn’t risk being caught on public transportation.
Cranking the volume a bit, The Sun, a somewhat sensationalist paper out of the UK, linked to footage of what it said were:
…at least ten workers jumping over the fence outside The Foxconn Technology Group’s main factory in Zhengzhou amid reports of “chaotic infighting.”
The Sun said it had heard word of employees “fighting over food as scuffles […] ensued over rations.” And still the volume grows. A piece from AppleInsider points to a report from the Washington Post that shows more people bugging out. To its credit, the Post says it cannot independently verify the photos and videos of departing workers making the rounds. It also did not list a number, though the one picture posted with the Post article showed more than ten people taking off.
As Workers Go, So Goes the Work
It’s not just the roar of the crowd getting louder. There are also questions around iPhone production. The South China Morning Post piece from a little over a week ago had a Foxconn spokesperson saying “Production in the Zhengzhou campus remains normal, without a notable impact [from the Covid-19] situation…” Later in the week, CNBC had the“relatively stable” comment I mentioned a moment ago. The same piece had Foxconn calling that the impact on affected workers “controllable.” As for iPhone production, the company said then that the outlook for the December-quarter had not changed. So far, Foxconn does not seem to have changed that stance, though others have said otherwise.
Over the weekend, TF International analyst Ming-Chi Kuo said in a series of Twitter posts that the iPhone City plant operating in “closed-loop” mode had hampered iPhone production. While it’s unclear when the closed-loop was implemented, reports say that could have started as early as mid-October. He also said that Foxconn had planned to slow iPhone production over the November/December time period, though the disruption in production was delaying that production drawdown. According to one of the analyst’s posts:
More than 10% of global iPhone production capacity is currently affected as Foxconn’s Zhengzhou iPhone plants suddenly entered closed-loop production without warning.
Somebody wanna crank that? The Mac Observer ran a piece Monday under the headline, “Foxconn iPhone Shipment Could Fall As Much As 30% in November, Sources Say.” That’s apparently what anonymous sources told Reuters. Not that the big players involved are going to be cool with that. The TMO piece has nameless so-and-sos on China’s social media site, Weibo saying Foxconn is “working hard to increase production at [a] Shenzhen factory.” Meanwhile Ming-Chi Kuo said over the weekend that Apple was talking with Pegatron and Luxshare about moving some of their lines from producing iPhone 14 and iPhone 14 Plus to cranking out iPhone 14 Pro and Pro Max units.
Ripple Likely Already Felt in Supply
What are the odds that all of this will negatively affect iPhone availability? It kind of looks like it already has. Another piece from AppleInsider has word of the latest from JP Morgan’s Apple Product Availability Tracker. That has wait times lengthening for phones at the Pro end of the 14 line. “According to JP Morgan,” according to AppleInsider:
…both Pro models have seen their lead times extended to where they were roughly two weeks ago. The iPhone 14 Pro and Pro Max saw their times shift from 24 days each in week 7 to 31 days apiece in week 8.
The piece has JP Morgan figuring the extended waits are “a reflection of [the] recent COVID-related outbreak leading to disruptions at a major iPhone factory in China.” The firm also calls the lengthening lead times “atypical” at this point in a release cycle.
“If We Make It Through December…”
Assuming the disruptions persist, sales are going to be… interesting this quarter. Whether that’s interesting in a good way or a bad way depends on who you ask. A piece from MarketWatch had Mizuho Securities analyst Jordan Klein and Barclays Capital analyst Tim Long agreeing that sales are likely to remain constrained this quarter. Where they split was on how bad that’ll be.
The piece had Barclays’ Long looking to the near term. Having run some channel checks in China over the weekend, his firm:
…came away incrementally negative on the prospect for AAPL to meet consensus estimates for Dec-Q, even though they just reported last week.
While Mizuho’s Klein might agree, he took a longer view for his thoughts. MarketWatch had him saying:
…we see neutral impact over medium term,” since “all that really matters is true end demand,” Klein wrote. “If anything, I view this as a POSITIVE as tight supply limits risk AAPL slows production in Dec qtr, and demand push into Mar offers a buffer on seasonal slowdown.”
Counterpoint Sees Building Supercycle for Apple Hardware
Here is a weird prediction, considering today’s economy, and a prediction likely welcomed by Apple investors. 9to5Mac has word of a new report from Counterpoint Research that “suggests that another Apple supercycle may be building…”
Remember all of the comments on last week’s earnings call that half the people buying this Apple thing and two-thirds of people buying that Apple thing were new to the various devices and platforms? Counterpoint says that is what’s going to do it.
For iPhone, the research firm notes “record growth in emerging markets [such as] India, Indonesia, Thailand, Vietnam and Mexico…” Last quarter, as in many quarters past, Apple said that more than half the people buying a Mac had never had a Mac before. Two-thirds of people buying an Apple Watch had never had one of those before. And finally, there’s serious strength for Apple in the enterprise. “Overall,” says Counterpoint:
…Apple’s strong grip over its user base continues to act as a growth engine, while its ‘walled garden’ approach builds further stickiness and brings in new users across its ecosystem. The current macro headwinds remain a temporary hurdle in the face of a longer-term growth supercycle as the company’s installed base continues to set new records.
M2 MacBook Air Lands in Apple Refurbished Store
If you’d like a new laptop at a less than new price, you may want to pay Apple’s Refurbished Store a virtual visit. MacRumors says the Cupertino-company’s M2 MacBook Air has turned up there. Launched in July, the piece says this is the first time the li’l laptop has been offered at a discount by Apple. According to the piece:
There are several variants available with different configurations and colors, but the base model MacBook Air with M2 chip, 8-core [CPU], 8-core GPU, 8GB RAM, and 256GB SSD is available for $1,079, a $120 discount off of the original $1,199 price.
Good things about the refurbished store include the refurbishment, the availability of AppleCare+, and the discounted prices. One bad thing — stuff comes and goes. That said, if you’re looking for Apple’s latest at a lower cost, the M2 MacBook Air is among the refurbished store’s hit-and-miss wares.
Apple TV+ Announces ‘Little America: The Official Podcast’
And finally today, news of another Apple podcast that ties into an Apple TV+ series. The Cupertino-company issued a press release late last week announcing “Little America: The Official Podcast,” and offering a trailer for it.
If you’ve not seen season one of the TV series Little America, I cannot recommend it enough. Executive produced by Kumail Nanjiani, Emily V. Gordon, and CODA director Sian Heder among others, the series tells the based-on-a-true-story stories of individuals from around the world who have made the U.S. their home.
The podcast does that, but without the Hollywood. Hosted by Kumail Nanjiani, Apple says the podcast is:
…a nonfiction exploration of the immigrant experience in America (…) Each of the audio series’ eight episodes features a different journalist who shares a unique story, from the weird and humorous to the gut-wrenching and poignant.
Eight episodes of the podcast have been announced. The first three will hit Apple Podcasts and other podcast aggregators this Thursday 3 November. The remaining five will hit once a week on successive Thursdays — wrapping the run on 8 December. That’s just a day ahead of season two of the TV series Little America. That hits Apple TV+ on Friday 9 December.
Today on The Mac Observer’s Daily Observations podcast
TMO Managing Editor Jeff Butts and I talk over the growing noise around iPhone and COVID and Zhengzhou and all of it. Plus: Reports says Apple once considered a low-cost, plastic iPad. Jeff and I kick the idea around on the Daily Observations Podcast from The Mac Observer.