Apple Inc (NASDAQ: AAPL) is trading down on Monday after the multinational said it was temporarily cutting iPhone 14 production, citing the COVID restrictions at its primary facility in Zhengzhou, China.
The tech behemoth, over the weekend, said that the “Foxconn” facility that produces the majority of its iPhone 14 Pro and iPhone 14 Pro Max is running at “significantly reduced capacity” following the recent lockdown in Zhengzhou.
What it means is that the iPhone sales will likely be lower this holiday quarter as customers will have to wait longer to receive the new handset.
The news is all the more concerning since Apple has already had a weak quarter in terms of iPhone sales. Late last month, it reported $42.63 billion in iPhone sales for its fourth financial quarter versus $43.21 billion expected. (find out more)
Apple shares are now down about 25% for the year.
On the bright side, though, Apple Inc said demand for its higher-priced iPhones remains very strong. On top of that, Samik Chatterjee – Senior Analyst at JPMorgan says the temporarily lowered production doesn’t mean much anyway.
There’s limited evidence [in history] that delays in shipping devices have had any impact on overall volumes for a product cycle over a multi-quarter period. Consumer willingness to wait for high-end iPhones limits demand destruction.
Foxconn is aiming to resume production at full capacity by the end of November.
Those interested in buying Apple shares should also consider that Wall Street, despite the macro and company-specific challenges, is sticking with its “overweight” rating on the Nasdaq-listed firm.
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