Good news for “iPhone City,” bad news from Nikkei Asia, and a look at what might have been…
Bloomberg: ‘iPhone City’ Back to 90% Shipping Capacity
Let’s start with some good news. A piece from Bloomberg says Foxconn’s “iPhone City” plant in Zhengzhou, China is already back at ~90% shipping capacity. Given the zero-COVID fiasco that hindered iPhone 14 Pro/Pro Max production and likely cratered iPhone sales in the December-quarter, this is good news for Apple and its customers, assuming the news is true.
Bloomberg cites a report from the official Henan Daily saying the plant is staffed back up to roughly 200,000 workers. The piece says that’s “about the normal staffing level, based on previous reports.”
They still missed Christmas, which stinks, but there should be plenty of top-level iPhones available for the Lunar New Year season. Of course, rumor has COVID running rampant in China. Some have questioned whether consumers there will spend through an apparent COVID surge or hold onto what they have. While Apple might address that on the December-quarter earnings call, the Apple watching world won’t have hard numbers on Lunar New Year sales until the March-quarter call. That likely won’t hit until late April or early May.
Nikkei Report Sends Apple Valuation Below $2T
The bad news for the day may not be actual news, though it was presented by a financial news site. Nikkei Asia ran a piece Tuesday, the first two paragraphs I’ll relay to you now:
China’s tech supply chain is heading into the new year facing the twin challenges of slumping demand and staffing chaos caused by Beijing’s abrupt U-turn on COVID controls.
In a sign of the gloomy outlook for consumer electronics, Apple has notified several suppliers to build fewer components for AirPods, the Apple Watch and MacBooks for the first quarter, citing weakening demand, according to Nikkei Asia’s supply chain checks with several component suppliers.
Red alarm. Red alarm.
The piece had an unnamed manager at an Apple supplier saying:
Apple has alerted us to lower orders for almost all product lines actually since the quarter ending December, partly because the demand is not that strong… The supply chain in China is still trying to cope with the latest abrupt policy turns, which brought a shortage of laborers because of the sharp COVID surges.
Hey, maybe they should read Bloomberg…
Calling Nikkei Into Question
There are a few sensible reasons to question the Nikkei report. A commenter on AppleInsider said:
That report is faulty given AirPods, watch and MacBook have completely different supply chains so one “anonymous” supply chain manager in China would not have that information.
Philip Elmer-DeWitt at Apple 3.0 was more pointedly critical of Nikkei specifically. Quoting his take:
This outlying report of “not that strong” demand, coming from a single unnamed source and a news outlet with a history of late-in-the-quarter Apple bashing, seems to have been taken as gospel by the news desk at Seeking Alpha. And by the Street…
Even if the Nikkei piece is spot on, though. Even if Apple has reduced component orders from here to there and back again, let us say “happy anniversary” to this Tim Cook quote. When questioned about component orders for iPhone 5, it was ten-years ago this month that Apple’s CEO said:
I’d stress that even if a particular data point were factual, it would be impossible to interpret for our overall business… Yields can vary. Supplier performance can vary. There’s an inordinately long list of things that would make any single data point not a great proxy for what’s going on.
Aftermath
What’s funny is, most of the Nikkei article was about the many ways the evident surge in COVID cases will affect manufacturing and sales in China. I think I’ve told you everything the article said about Apple specifically, but that seems to have been enough to spur a sell-off. Apple’s outlook for the day was positive before the Nikkei piece. Then that. Then this. A piece from MacRumors says the damage was done. Apple shares ended the day down $4.86 to close at $125.07. That sent the company’s market valuation just below $2 trillion on Tuesday. That’s the first time it’s been below $2T since June of 2021. It was close to $3 trillion this time last year, according to the report.
As for where it is now, when I say “just below,” I do mean just. Tuesday afternoon, a Yahoo! Finance chart showed the market valuation for AAPL at $1.99 trillion.
JP Morgan Says iPhone Commanded 69% of US Smartphone Market in November
For a look at what might have been we turn the calendar back to November. That is when JP Morgan analyst Samik Chatterjee says iPhone grabbed 69% of the smartphone market in the U.S. Apple 3.0 ran part of the note he wrote, wherein the analyst indicated that that percentage is actually on par for Apple. For the iPhone 13 cycle, Chatterjee says iPhone’s share was 67%, while the iPhone 12 cycle saw iPhones marketshare at the same 69% seen this past November.
I say this news hints at what might have been. We’d only started to see iPhone 14 Pro/Pro Max waits lengthen as November rolled on. According to Chatterjee’s note:
Due to the supply issues relative to the Pro models, the share of base iPhone 14 in the mix increased to 20% vs. 17% in October, while that for the Pro Models combined declined to 34% vs. 38% in October.
It seems obvious that Apple would have sold more Pro phones had it had more Pro phones to sell — that’s the “what might have been” part. It will be interesting to see what percentage of the U.S. smartphone market Chatterjee and company track for the iPhone for December. Will people have chosen a phone from another manufacturer? Will they have traded down the iPhone line? Or will they have skipped smartphones entirely, unable to get a Pro phone to call their own?
Maybe we’ll find out in a month. In the meantime, Chatterjee has an “Overweight” rating on Apple shares. He’s set JP Morgan’s price target on the shares at $190.
Disney+ Marketing Exec Now Head of Marketing for Apple TV+
A Disney+ exec has traded in his Mouske-ears for an Apple lanyard. 9to5Mac says Ricky Strauss, formerly president of marketing at Disney+, is the new head of marketing for Apple TV+. The piece says the “appointment follows the departure of prior marketing head Chris Van Amburg, in September.”
MagSafe Folding Into Wireless Charging Standard Qi2
Next-generation Qi charging technology may seem pretty standard to Apple users. MacRumors says the Cupertino-company is working with the Wireless Power Consortium (WPC) to make MagSafe a big part of Qi2. In a press release, the organization said:
WPC member, Apple, provided the basis for the new Qi2 standard building on its MagSafe technology. Apple and other WPC members developed the new Magnetic Power Profile, which is at the core of Qi2. Qi2’s Magnetic Power Profile will ensure that phones or other rechargeable battery-powered mobile products are perfectly aligned with charging devices, thus providing improved energy efficiency and faster charging.
My bedside charger is not a MagSafe charger. The number of times I’ve woken to find my phone was not properly aligned for charging… well, it’s not a big number. But, boy is it frustrating when it happens.
While the press release was set to coincide with this week’s Consumer Electronics Show in Las Vegas, Tuesday’s announcement was more a sort of pre-announcement. “The Qi2 standard will be introduced later this year,” according to the release.
Third-Gen iPad mini Lands on Apple’s Obsolete List
And finally today, pour one out for another piece of Apple hardware. MacRumors says the third-generation iPad mini… has gone to live on a farm.
Launched in 2014 in lockstep with the second-generation iPad Air, a piece from MacRumors says the diminutive tablet featured and A7 processor and Touch ID in the Home button. That same piece says the Cupertino-company has moved the machine to its list of obsolete hardware. That means the device is no longer eligible for service from Apple, nor from Apple Authorized Service Providers.
Today on The Mac Observer’s Daily Observations Podcast
News about iPhone City, the turmoil around the Nikkei story… and information from The Information on Apple’s mixed reality headset. TMO Managing Editor Jeff Butts joins me for “The Good, the Bad, and That Sounds Ugly” on the Daily Observations Podcast from The Mac Observer.