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Apple faces iPhone shortages amid Chinese protests

Yahoo Finance's Dan Howley explains the impacts of COVID protests and lockdowns on Apple iPhone production.

Video Transcript

RACHELLE AKUFFO: Well, Apple may fall short of its iPhone 14 Pro production target by nearly 6 million units, as one of its key manufacturing hubs in China faces unrest. Now, this is according to a report from Bloomberg. For more on this, let's bring in Yahoo Finance's tech editor, Dan Howley. So Dan, what are you watching right now?

DAN HOWLEY: Yeah, that's right, Rachelle. This is basically a major blow to Apple as far as the iPhone sales go for the holiday period. This-- these protests that we're seeing out of this Foxconn plant, where workers are stepping out and saying-- calling out the zero-COVID policies, have been going on for some time, where some workers have said, look, we're just going to try to take off in October. Some of them tried to flee the factory, as lockdowns were going into place because of some COVID cases. They were also protesting against a lack of adequate food supplies.

Then the company brought in new workers with the promise of higher wages, just to ensure that they can get the work done that they needed on these iPhone units. And now these workers are also protesting against the policy. So this is a kind of ongoing problem that Foxconn is dealing with. And these protests coincide with other protests around the country related to the zero-COVID policy.

But for Apple, the factory issue is that this is the iPhone Pro model, the iPhone 14 Pro model, the Pro and Pro Max. Those have the higher selling price for Apple. And they're really the ones that have a different kind of setup. They have that dynamic island. They have the better camera. And so you would think that these are the phones that most people are going for. And in fact, Apple actually cut back on some of the planned production of the iPhone 14+, which is not a Pro model because it just wasn't getting as much attention as the Pros.

So the fact that the Pros are really in danger here means that we could see a reduction in average selling price that we were expecting. 6 million units not-- nothing to sneeze at here. And so, for Apple, this comes at a terrible time just because this is the holiday shopping season when they do sell a huge amount of their units, and people are out there looking for them. They might just not have them.

RACHELLE AKUFFO: I mean, tough news for Apple. We know they were really counting on those 14 Pros. Dan Howley, thank you so much.