Speaker 1: Let's get now to Lad sever of Bloomberg Tech editor
Speaker 1: joining us from Tokyo. With Apple cutting its outlook for
Speaker 1: iPhone shipments after China lockdowns affected operations at a supplier's factory.
Speaker 1: So the disruption coming at a bit of a crucial
Speaker 1: time for Apple. Lad. But is it really that we
Speaker 1: are not seeing demand or is it just the fact
Speaker 1: that these lockdowns are really going to affect operations and
Speaker 1: production and rollout of the new iPhones. It isn't the
Speaker 1: crucial time. This is the peak season for iPhone production.
Speaker 1: The company foxcon It's main supplier. They're both building up
Speaker 1: for the holiday shopping season. There are holiday festivals such
Speaker 1: as November leventh in China. Now, the mix of supply
Speaker 1: and demand that is really the tricky question here. Um.
Speaker 1: If you look at analysts addressing specifically the China market
Speaker 1: is the biggest model market in the world, they are
Speaker 1: seeing Apple's iPhones sales dropping at an accelerating rate, much
Speaker 1: more so than in previous years. And there is strong
Speaker 1: indication that the regular non pro models um I thinking
Speaker 1: a lot lower demand this and it has to do
Speaker 1: a lot with China's own economy and the global economy
Speaker 1: is sewing down. What Apple said in this statement with
Speaker 1: with this production disruption is that it is still seeing
Speaker 1: strong demands for the iPhone Forward in Pro and I
Speaker 1: Refording Promax. These are the models that are manufactured at
Speaker 1: that Jango facility which is currently on the lockdown. UM.
Speaker 1: But the company and Foxcone itself are saying the bringing
Speaker 1: optimistic notes so to say that the current lockdown is
Speaker 1: scheduled to end on November ninth, UM and after it
Speaker 1: they should be able to get back on track. Um.
Speaker 1: They speak more about delays two people's orders rather than
Speaker 1: so much uh losing shipments over the first quarter. So
Speaker 1: is this a story then that is just going to
Speaker 1: be of of the fourth quarter and potentially the first
Speaker 1: quarter if we do start to see a relaxation of
Speaker 1: COVID zero rules. What is Hornhei telling us about their
Speaker 1: outlook for the quarter? It's uncertain. Um, As you say,
Speaker 1: nobody really has a great idea, because I mean, this
Speaker 1: is lockdown and came out of nowhere. It wasn't in advance.
Speaker 1: It was an action that actually followed some disruption and
Speaker 1: the facility itself because Harnhei wasn't able to manage it.
Speaker 1: Uh in an ideal fashion. So these disruptions, the really
Speaker 1: tweecky thing with them is that uncertainty. Uh in terms
Speaker 1: of when we start to see I guess a little
Speaker 1: bit more of a pickup. We know that Apple has
Speaker 1: has paused hiring for many jobs outside research and development.
Speaker 1: We're talking about these Wall Street Journal reports of Meata,
Speaker 1: you know, pausing hiring too, and other job cuts coming
Speaker 1: through in the tech space. How much of a slowdown
Speaker 1: are you hearing is happening in the tech sector regardless
Speaker 1: of the lockdowns in China. Um, well, it's exactly to say,
Speaker 1: it does seem to be reaching all over the industry. UM.
Speaker 1: I suppose if there is going to be any sort
Speaker 1: of tonic is going to be all the Twitter engineers
Speaker 1: are now currently available and probably really easy to hire
Speaker 1: for other companies. But aside from and um, there is
Speaker 1: that the stronger focus on efficiency of spending where there
Speaker 1: it is, as you say, Apple, Meta, etcetera. UM. For
Speaker 1: Apple and folks colon specifically, they will be hoping for
Speaker 1: this issue, at least on the supply side, to be
Speaker 1: resolved much sooner than the first quarter. But then the
Speaker 1: man side is really going to be tied into the
Speaker 1: global economy and consumer sentiments. TAG and consumer electronics are
Speaker 1: very much tied to that. The iPhone is kind of
Speaker 1: a bare weather for that. If things are going great,
Speaker 1: you'll see more iPhone sales. If they're not, people suffer
Speaker 1: as well. Yeah, in terms of also the impact of
Speaker 1: China's lockdowns and the impact that it's having on its
Speaker 1: own economy and company's desire to actually manufacture there, we
Speaker 1: saw Apple adding that new iPhone fourteen maker in India.
Speaker 1: How much of a shift do you think that we
Speaker 1: are going to see Apple gradually diversify the geography here
Speaker 1: of a supply chain. That's right, That's right Apple again,
Speaker 1: UM for force in production with Pegotron, another one of
Speaker 1: his Taiwanese partners in India. And it's worth saying this
Speaker 1: wasn't triggered just by the current issues. It's these are
Speaker 1: things that I planned months and months, maybe years in advance. UM.
Speaker 1: It has accelerated this year. Specifically India production of the
Speaker 1: iPhone came only weeks UM a few weeks after the
Speaker 1: launch and very close to the start of China production,
Speaker 1: which is much much improved on previous years. We can
Speaker 1: probably anticipate that growing India is really pushing to bring
Speaker 1: in small phone manufacturing, electronics manufacturing within its borders. And
Speaker 1: the iPhone is the thing that everyone wants to have
Speaker 1: and and it is putting forward financial incentives for the
Speaker 1: likes of Pegotron and fox Con to put more production there.
Speaker 1: And let's be fair, um, the current lockdowns and situations
Speaker 1: in China, they probably not Jappo in that direction too.
Speaker 1: And just a very quick final word, I mean you
Speaker 1: mentioned it's a bit of an indicator because if people
Speaker 1: are buying a new iPhone, then they're doing okay. If
Speaker 1: they're not, then they are worried about the future. What's
Speaker 1: the kind of I guess earnings outlook that you're seeing
Speaker 1: or hearing from analysts. You put it really nicely there,
Speaker 1: but by the way, better than I did earnings outlook
Speaker 1: for for Apple and elsewhere. I mean, at the moment,
Speaker 1: just because of the redundancy and the strength of Apple
Speaker 1: supply chain systems, UM, I wouldn't expect like a huge
Speaker 1: drop off just because of these current lockdowns. There is redundancy,
Speaker 1: especially for the regular iforms rather than the pro models. UM,
Speaker 1: so we we can again, I would actually lean back
Speaker 1: to uncertainty. There is a lot of uncertainty going forward. Alright,
Speaker 1: flat always a pleasure of Lad Sapper of Bloomberg Tech
Speaker 1: Editor with us from Tokyo,