Pronouncements on iPhone production, two tales of Apple and retail worker unions, and more on Apple’s advertising pause on Twitter.
Foxconn Expects Normal Production from Zhengzhou’s ‘iPhone City’ in 3-to-4 Weeks
Given the number of times over the past month that Foxconn has started, stopped, and restarted hiring at its “iPhone City” plant in Zhengzhou, China — it’s hard to get too excited about positive comments from the company. And yet, the world was treated to a few on Monday. MacRumors highlights a Reuters report that seemed to include official and unofficial comments from Apple’s contract manufacturing partner. On the unofficial, Reuters had a Foxconn source saying the “situation has stabilized,” in reference to “protests in Zhengzhou and the government’s easing of COVID restrictions.” According to the source:
The local government is actively helping with the resumption. The capacity is now being gradually resumed with new staff hiring under way. If the recruitment goes smoothly, it could take around three to four weeks to resume full production…
Yeah, keep making your if it “goes smoothly” comments…
Assuming things do go smoothly, that would put operations back to rights at the end of December/first part of January. As for official comments, a statement from Foxconn said presently, “the overall epidemic situation has been brought under control with November being the most affected period.” The company added that recruitment is once again underway, and that it is gradually “restoring production capacity to normal.”
Surveying the Current Scene
Now, Apple watchers are just left to wonder how abnormal things actually were. Well, that and whether things will go as smoothly as Foxconn’s predicting. On assessing abnormality, I told you yesterday of Evercore analyst Amit Daryanani’s stated belief that Apple will have missed between 5-million and 8-million iPhone units once the December quarter’s done. His numbers are pretty positive compared to his compatriots. He says consensus is calling for a miss of ~10-million units, while the more bearish of the bunch see a miss as high as 15-million. Surprisingly, it is between those numbers that we find one of the most bullish Apple analysts out there.
Apple 3.0 ran part of a note Monday from Wedbush analyst Daniel Ives. In it, he put himself in that bad-to-worse range — anticipating “iPhone shortages between 10 million and 15 million units in this all-important holiday season…” While his “missing Christmas” expectations are worse than Daryanani’s, he agrees with the Evercore analyst that these will end up being sales deferred, not sales lost. Quoting Ives’ note:
We estimate demand vs. supply from consumers around iPhone 14 Pro today are currently at a 3:1 ratio as many Apple stores, retailers, and online channels are looking empty handed for most iPhone 14 Pro models until at least early to mid January. We could see some consumers trade down to the base model iPhone 14 or iPhone 14 Plus, however our expectations is that roughly 10 million to 15 million iPhones (and potentially more) will move from the December quarter into the March quarter as supply starts to ramp back up over the coming weeks (assuming no more China shutdowns and protests).
Yeah. Just keep saying stuff like that out loud, why don’t ya…
Interestingly, the thrust of his note was not about current-quarter iPhone expectations. It was largely centered on last weekend’s Wall Street Journal piece that had Apple telling suppliers to prep for more production outside of China. Bottom line: It won’t be simple, but it will be doable. Quoting his note again:
The shift out of China will not be easy and come with clear logistical, engineering, and infrastructure hurdles as the aggressive move to India and Vietnam now begins with the Apple ecosystem alerted. We believe by 2025/2026 if Apple moves aggressively more than 50% of iPhone production could come out of India and Vietnam vs. single digits today.
Mr. Ives has an “Outperform” rating on Apple shares. His price target on the shares is $200.
CNBC Sources Say Apple and India Are Talking iPad Production
iPhone is not the only thing Apple makes in China, so — of course — it is not the only thing Apple might like to make elsewhere. CNBC says the Cupertino-company has talked with officials in India about moving at least some iPad production to the subcontinent. The site cites two unnamed sources “close to the Indian government,” saying, “India is exploring options to bring some of Apple’s iPad production to the country from China.” While discussions are said to be ongoing, the piece says that no official deal has been reached.
Apple declined to comment for the CNBC piece.
Regulatory Review Delays Apple Pay Launch in South Korea
Last week, the Apple watching world expected Apple Pay to launch in South Korea. Didn’t happen, and you can blame red tape.
On Nov. 29, a piece from 9to5Mac had “a local bank (…) announcing that its customers [would] be able to use Apple Pay starting November 30.” Now, a piece from AppleInsider says last week’s anticipated launch was delayed by a last-minute regulatory review. The piece has South Korea’s Financial Supervisory Service saying there’s “something they are looking into as part of the review, which needs to be completed before the review ends.” The piece is unclear on what the FSS is investigating specifically.
“Despite the regulatory slowness,” AppleInsider says, “there is still an expectation for Apple Pay to arrive in South Korea by the end of December at the earliest, or in early 2023.”
Two Tales of Apple and Retail Worker Unions
NLRB Says Atlanta Anti-Union Tactics Were Illegal
Two opposing tales of Apple and unionization efforts today, both from our friends at Bloomberg. The first (via Yahoo! Finance) has the National Labor Relations Board saying that the Cupertino-company’s “anti-union tactics in Atlanta were illegal,” while the second (also via Yahoo! Finance) has retail workers in St. Louis saying, “Why would we want a union?” Quoting the first story:
US labor board prosecutors have determined that Apple Inc. violated federal law by interrogating and coercing employees in Atlanta (…)
The National Labor Relations Board’s Atlanta regional director also concluded that Apple held mandatory anti-union meetings during which management made coercive statements and will issue a complaint if the company doesn’t settle…
The piece has the Communications Workers of America (CWA), the organization that represented Atlanta retail workers in their attempt to unionize, saying in statement:
Apple executives think the rules don’t apply to them… Holding an illegal forced captive audience meeting is not only union-busting, but an example of psychological warfare. We commend the NLRB for recognizing captive audience meetings for exactly what they are: a direct violation of labor rights.
Monday’s move by the NLRB may begin a journey with many steps. Bloomberg says complaints by NLRB regional directors go to NLRB judges for consideration. Decisions by those judges can be appealed to NLRB members in DC. After that, they can go to federal court. Assuming Apple doesn’t settle.
St. Louis Apple Store Workers Reject Union
On the same day that the NLRB says Apple was up to no good in trying to thwart union plans, a group of retail workers who had been considering union seem to have had a really swift about-face. Quoting the other Bloomberg report:
Apple Inc. retail employees pushed back on unionization efforts at a location in St. Louis, with staffers saying they don’t want to be represented by the International Association of Machinists & Aerospace Workers (IAM), a labor group that recently attempted to organize the store.
According to a petition that workers are filing with the National Labor Relations Board, 66 of the store’s 90 employees — nearly three-quarters — have rejected the IAM, saying they “do not want to join the union and do not support the union in any manner.”
The IAM dropped its unionization efforts in late November, around the same time retail workers started collecting anti-union signatures, according to the report. At the time, the IAM blamed “anti-union practices and increased hostility toward workers.” According to a statement from the employees Monday:
The reality is much simpler: The majority of employees at this Apple Store do not wish to work with the IAM… The majority of workers at the St. Louis Galleria Apple Store do not believe a union is required at this time, nor do they wish to work with the IAM in the future.
“According to the employees’ statement,” according to Bloomberg:
…workers said they didn’t feel “the union would provide anything complementary to Apple’s culture and existing benefits” and that some felt misled after initially giving support to the group…
Are you like me? Do you wonder who organized the statements?
Ars Technica: Apple’s Twitter Ad Pause a Response to Club Q Shootings
We have, it seems, gotten to the bottom of the Apple/Twitter advertising mystery. Of course you remember the tempest in a Tweet started by Twitter owner Elon Musk last week. Offering no proof, Musk took to Twitter saying, “Apple has mostly stopped advertising on Twitter. Do they hate free speech in America?”
It was an odd assertion, with some “prominent Apple bloggers” pointing out that Apple ads actually appeared on Twitter next to Musk’s Tweets bashing Apple. Additionally, a Gizmodo piece had the ad analytics firm Pathmatics indicated that Apple spent close to $85,000 on Twitter ads that day. The day before that, the Cupertino-company spent nearly $105,000. For the month of November, Pathmatics says Apple spent a little over a million dollars on Twitter ads — more than October’s ~$989,000.
And yet, a piece from Ars Technica says Apple did pause advertising for a period in November, though it had nothing to do with Musk and nothing to do with free speech. According to Ars, Apple pulled its ads after the mass shooting at the LGBTQ+ nightclub “Club Q” in Colorado Springs. That tragedy left five people dead and several injured. Quoting Ars Technica:
Two former Twitter employees told The New York Times that the tech company was protecting its brand by ensuring that Apple ads wouldn’t appear next to news reports of the mass shooting.
So… you know… well done, Elmo.
Apple TV+ Outs Trailer for Fourth and Final Season of ‘Servant’
And finally today, there’s a trailer out for the fourth and final season of the Apple TV+/M. Night Shyamalan series Servant. It’s hard to say anything without giving anything away. The press release is up now on Apple’s site. Seasons one, two, and three are available to stream now on Apple TV+. Season four begins on Jan. 13, 2023. You can, of course, catch the season four trailer on YouTube.
Today on The Mac Observer’s Daily Observations podcast
TMO Managing Editor Jeff Butts and I talk the current and future state of iPhone production and Mr. Musk’s advertising mess. That’s all today on the Daily Observations Podcast from The Mac Observer.