Morgan Stanley cuts iPhone shipment estimate by another 3 million units

Morgan Stanley decreased its Apple iPhone cargo forecast for the December quarter by an extra 3 million items on Wednesday to account for slower manufacturing in China. The agency had already lower cargo expectations by 6 million items in November.

Morgan Stanley now expects Apple to ship round 75.5 million items, down from its unique forecast of 85 million items. It comes as Apple suppliers face turmoil in China.

Last month, manufacturing unit employees clashed with safety personnel on the Zhengzhou plant in China, the world’s largest iPhone manufacturing unit run by Apple’s meeting associate Foxconn. The manufacturing unit was additionally hit by a Covid-19 outbreak in October that brought about employees to flee the ability as the corporate moved to manage the outbreak by isolating contaminated folks.

Morgan Stanley analysts mentioned the unrest will impression what’s traditionally Apple’s largest quarter, which is usually bolstered by the vacation procuring season. The analysts anticipate Apple will report about $120 billion in December quarter income, leading to a 3% impression from the slower manufacturing. Apple reported $123.9 billion in its first fiscal quarter this yr, up 11% over 2021.

Shares of Apple have been down round 1% early Wednesday.

Despite the anticipated dip in shipments and income, the analysts mentioned the forecast doesn’t essentially replicate slowing demand.

“By now it’s well understood by investors that the Dec Q will be challenged due to iPhone supply shortages, and therefore the most important near-term debate is really how much of the lost demand from December is perishable vs. deferrable,” they wrote in a Wednesday be aware. 

“We believe demand for the iPhone 14 Pro/Pro Max remains solid, supporting the view that lost demand in December is more likely to be deferred into March than destroyed.”

Apple didn’t instantly reply to requests for remark.

CNBC’s Michael Bloom contributed to this report.