Can Apple Overcome Weak Demand For iPhone SE And Supply Disruptions For Its Other Products?

Zinger Key Points
  • The Apple analyst noted that demand for the iPhone SE has been weak.
  • Lead time for the MacBook Pro has increased by about three to five weeks since the lockdown in China.

As some parts of China went into lockdowns, Apple Inc.'s AAPL supply chain partners had to shutter operations. This has engendered fears regarding whether the tech giant can produce enough to meet surging demand for its hardware products.

What Happened: Apple's budget model iPhone SE assembled by Taiwanese contract manufacturer Pegatron is "in stock" on the company's online stores in several countries even after the China lockdown, TFI International Securities analyst Ming-Chi Kuo said in a tweet.

The Apple analyst noted that demand for the product has been weak. In late March, the analyst lowered his iPhone SE shipment forecast for 2022 from 25-30 million to 15-20 million.

Pegatron, according to the analyst, is Apple's second-largest contract manufacturer and has factories in Shanghai and Kunshan, two of the worst-hit by COVID-19 in China. Earlier this week, Kuo said Pegatron's production at these locations has been stalled and resumption is unlikely until late April or early May.

Related Link: Apple's Much-Awaited Mixed-Reality Headset May Not Launch This Year

MacBook Pro Supply Constrained: High-end MacBook Pro demand has been robust, Kuo noted. These are manufactured solely by Taiwan's Quanta Computer. Lead time for this product has increased by about three to five weeks since the lockdown in China, the analyst said.

On the Apple store, delivery times for 14-inch M1 Pro MacBook Pro and 16-inch M1 Pro and M1 Max MacBook Pro are listed as 5-7 weeks from ordering. This suggests a user ordering now cannot take deliveries before May-end to early June.

Apple is scheduled to report its fiscal year second-quarter results on April 28. The management could share more details on the supply chain and demand dynamics on the earnings call that would follow.

APPL Price Action: According to Benzinga ProApple shares are down 3% at $165.29 Thursday afternoon at market close.

Photo: Courtesy Apple

Posted In: ChinaCovid-19electronicsiPhone SEiPhone SE 3Ming-Chi KuoPegatronQuanta ComputerTF International SecuritiesAnalyst ColorNewsGlobalAnalyst RatingsTech

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