Apple Supply Chain and Product Overview｜December 2022

Key Takeaways:

iPhone Production Forecast (Y2022)

• Although China authorities announced to ease the COVID restrictions in the early December, we still reiterate our Y2022 iPhone production forecast of 240~245M since we have already contemplated the operation recovery in Foxconn Zhengzhou.

iPhone EMS Reallocation Plan

• After several supply chain disruptions in Y2022, Apple may shift iPhone’s manufacturing sites to countries other than China to avoid geographically concentration risks. Because of competitive labor costs, India appears to be a desirable location, and we expect the proportion produced in India may increase from 5~10% in Y2022 to 18~23% in Y2024.
• To meet Apple’s risk diversification requirement, Foxconn may be planning to reallocate some of CCM capacity to India Chennai from China Foshan.

iPhone 14 Series Panel Preparation (Y2022)

• We check that Apple has revised down the Y2022 panel preparation volume for all 4 models of the iPhone 14 series, considering both the impact of the production disruption in Foxconn’s Zhengzhou fab and the unsatisfied actual market demand.

Apple’s IT Products Update

• Apple Watch - We check that the market reaction toward Apple Watch Ultra may be better than expected thanks to its relatively attractive price compared to other watches for extreme sport. Therefore, we slightly revise up the sell-in shipment of Apple Watch Ultra by 0.5~1M in Y2022.
• AirPods - We revise down our Y2022 AirPods sell-in shipment forecast to 70~74M units since we observe the decline in component preparation in 4Q22. However, we preliminary expect the Y2023 AirPods sell-in shipment may have a negative 8~13% YoY due to a lack of new products and a bleak market outlook.

Full insights delivered in Dec'22 Monthly Report.