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Speaker 1: Let's get now to Lad sever of Bloomberg Tech editor

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Speaker 1: joining us from Tokyo. With Apple cutting its outlook for

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Speaker 1: iPhone shipments after China lockdowns affected operations at a supplier's factory.

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Speaker 1: So the disruption coming at a bit of a crucial

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Speaker 1: time for Apple. Lad. But is it really that we

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Speaker 1: are not seeing demand or is it just the fact

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Speaker 1: that these lockdowns are really going to affect operations and

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Speaker 1: production and rollout of the new iPhones. It isn't the

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Speaker 1: crucial time. This is the peak season for iPhone production.

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Speaker 1: The company foxcon It's main supplier. They're both building up

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Speaker 1: for the holiday shopping season. There are holiday festivals such

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Speaker 1: as November leventh in China. Now, the mix of supply

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Speaker 1: and demand that is really the tricky question here. Um.

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Speaker 1: If you look at analysts addressing specifically the China market

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Speaker 1: is the biggest model market in the world, they are

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Speaker 1: seeing Apple's iPhones sales dropping at an accelerating rate, much

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Speaker 1: more so than in previous years. And there is strong

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Speaker 1: indication that the regular non pro models um I thinking

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Speaker 1: a lot lower demand this and it has to do

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Speaker 1: a lot with China's own economy and the global economy

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Speaker 1: is sewing down. What Apple said in this statement with

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Speaker 1: with this production disruption is that it is still seeing

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Speaker 1: strong demands for the iPhone Forward in Pro and I

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Speaker 1: Refording Promax. These are the models that are manufactured at

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Speaker 1: that Jango facility which is currently on the lockdown. UM.

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Speaker 1: But the company and Foxcone itself are saying the bringing

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Speaker 1: optimistic notes so to say that the current lockdown is

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Speaker 1: scheduled to end on November ninth, UM and after it

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Speaker 1: they should be able to get back on track. Um.

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Speaker 1: They speak more about delays two people's orders rather than

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Speaker 1: so much uh losing shipments over the first quarter. So

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Speaker 1: is this a story then that is just going to

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Speaker 1: be of of the fourth quarter and potentially the first

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Speaker 1: quarter if we do start to see a relaxation of

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Speaker 1: COVID zero rules. What is Hornhei telling us about their

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Speaker 1: outlook for the quarter? It's uncertain. Um, As you say,

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Speaker 1: nobody really has a great idea, because I mean, this

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Speaker 1: is lockdown and came out of nowhere. It wasn't in advance.

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Speaker 1: It was an action that actually followed some disruption and

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Speaker 1: the facility itself because Harnhei wasn't able to manage it.

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Speaker 1: Uh in an ideal fashion. So these disruptions, the really

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Speaker 1: tweecky thing with them is that uncertainty. Uh in terms

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Speaker 1: of when we start to see I guess a little

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Speaker 1: bit more of a pickup. We know that Apple has

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Speaker 1: has paused hiring for many jobs outside research and development.

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Speaker 1: We're talking about these Wall Street Journal reports of Meata,

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Speaker 1: you know, pausing hiring too, and other job cuts coming

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Speaker 1: through in the tech space. How much of a slowdown

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Speaker 1: are you hearing is happening in the tech sector regardless

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Speaker 1: of the lockdowns in China. Um, well, it's exactly to say,

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Speaker 1: it does seem to be reaching all over the industry. UM.

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Speaker 1: I suppose if there is going to be any sort

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Speaker 1: of tonic is going to be all the Twitter engineers

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Speaker 1: are now currently available and probably really easy to hire

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Speaker 1: for other companies. But aside from and um, there is

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Speaker 1: that the stronger focus on efficiency of spending where there

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Speaker 1: it is, as you say, Apple, Meta, etcetera. UM. For

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Speaker 1: Apple and folks colon specifically, they will be hoping for

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Speaker 1: this issue, at least on the supply side, to be

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Speaker 1: resolved much sooner than the first quarter. But then the

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Speaker 1: man side is really going to be tied into the

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Speaker 1: global economy and consumer sentiments. TAG and consumer electronics are

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Speaker 1: very much tied to that. The iPhone is kind of

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Speaker 1: a bare weather for that. If things are going great,

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Speaker 1: you'll see more iPhone sales. If they're not, people suffer

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Speaker 1: as well. Yeah, in terms of also the impact of

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Speaker 1: China's lockdowns and the impact that it's having on its

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Speaker 1: own economy and company's desire to actually manufacture there, we

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Speaker 1: saw Apple adding that new iPhone fourteen maker in India.

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Speaker 1: How much of a shift do you think that we

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Speaker 1: are going to see Apple gradually diversify the geography here

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Speaker 1: of a supply chain. That's right, That's right Apple again,

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Speaker 1: UM for force in production with Pegotron, another one of

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Speaker 1: his Taiwanese partners in India. And it's worth saying this

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Speaker 1: wasn't triggered just by the current issues. It's these are

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Speaker 1: things that I planned months and months, maybe years in advance. UM.

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Speaker 1: It has accelerated this year. Specifically India production of the

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Speaker 1: iPhone came only weeks UM a few weeks after the

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Speaker 1: launch and very close to the start of China production,

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Speaker 1: which is much much improved on previous years. We can

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Speaker 1: probably anticipate that growing India is really pushing to bring

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Speaker 1: in small phone manufacturing, electronics manufacturing within its borders. And

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Speaker 1: the iPhone is the thing that everyone wants to have

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Speaker 1: and and it is putting forward financial incentives for the

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Speaker 1: likes of Pegotron and fox Con to put more production there.

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Speaker 1: And let's be fair, um, the current lockdowns and situations

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Speaker 1: in China, they probably not Jappo in that direction too.

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Speaker 1: And just a very quick final word, I mean you

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Speaker 1: mentioned it's a bit of an indicator because if people

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Speaker 1: are buying a new iPhone, then they're doing okay. If

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Speaker 1: they're not, then they are worried about the future. What's

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Speaker 1: the kind of I guess earnings outlook that you're seeing

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Speaker 1: or hearing from analysts. You put it really nicely there,

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Speaker 1: but by the way, better than I did earnings outlook

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Speaker 1: for for Apple and elsewhere. I mean, at the moment,

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Speaker 1: just because of the redundancy and the strength of Apple

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Speaker 1: supply chain systems, UM, I wouldn't expect like a huge

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Speaker 1: drop off just because of these current lockdowns. There is redundancy,

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Speaker 1: especially for the regular iforms rather than the pro models. UM,

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Speaker 1: so we we can again, I would actually lean back

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Speaker 1: to uncertainty. There is a lot of uncertainty going forward. Alright,

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Speaker 1: flat always a pleasure of Lad Sapper of Bloomberg Tech

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Speaker 1: Editor with us from Tokyo,