What does 2023 look like for Apple and Foxconn?

• Foxconn, Apple’s main supplier, expects 2023 to likely be “flat” in terms of revenue growth amid uncertainty and various unforeseen factors.
• Given that TSMC’s 3nm chips are expected to enter commercial production this week, Apple may be the first to use 3nm chips for its upcoming M2 Pro chips.

The last quarter of 2022 was crazy for Apple Inc and its main supplier, Foxconn. In fact, both companies are still recovering from The turmoil caused by recent issues at the largest iPhone maker in Zhengzhou, China. So much so that Apple, whose smartphones have weathered the global economic downturn, took a huge hit during this year’s holiday season.

While Apple remains attractive based on its strong balance sheet and long-term sustainable growth path, the company still faces volatile issues ahead given the increasingly difficult macroeconomic environment. Even analysts are tempering expectations for Apple’s iPhone sales in the December quarter, as some investors question a soft bottom — whether or not Sales are lost or so just retarded– The impact of the global macroeconomic slowdown on demand.

For context, the iPhone 14 Pro and Pro Max models have taken center stage in Apple’s latest phone line. Foxconn is The only manifold for both high-end iPhone models, and most of them are made in Zhengzhou. Despite their high price tag, the Pro and Pro Max variants of the iPhone 14 are where the latest chipset and performance upgrades are, and the demand for these devices is on the rise. But the reported demand doesn’t necessarily mean good news for Apple or Foxconn.

In fact, the Foxconn factory in Zhengzhou operates in a closed loop and is responsible for producing more than 80% of the global iPhone 14 Pro and Pro Max units. Analysts say the remaining 20% will likely come from alternative sites, Like IndiaWhich is, of course It is not immune from China’s sprawling Covid restrictions.

The situation simply points to a tight environment for Apple’s best-selling and top-grossing devices during the holiday quarter. Meanwhile, production of lower-selling standard iPhone 14 models that have been moved to Foxconn’s smaller manufacturing facilities across China to avoid physical disruption to production levels have much lower acceptance rates.

The Standard 14 phone models have been relatively muted compared to their Pro and Pro Max counterparts as mass-market consumers tighten their belts even more as inflation soars and interest rates rise. Even Foxconn seems unsure of what the new year might bring, after such a disastrous last quarter of 2022.

Foxconn President Young Liu said his company, for now, sees no chance of significantly increasing revenue next year, in part because of this year’s high base. “For the next year, we see data center and cloud network products as the main drivers of growth, but consumer electronics and smart electronics in general will still be a bit slow and weak,” Liu said at an investor conference. Nikkei Asia Index Conversion.

Despite being the world’s largest maker of electronic contracts, Foxconn expects its revenue in the fourth quarter of this year to be slightly lower than last year, mainly due to COVID-related disruptions to its story. The main iPhone factory is located in ZhengzhouChina, which was launched in October.

Not everything is dark and disastrous

Apple and Foxconn may have had their fair share of trouble this year, but it’s pretty much the same across the board, especially in the technology sector. But it also means that a sharp recovery in 2023 is on the way as companies protect for-profits and the Federal Reserve cracks down on rate hikes, among other things, Wedbush Securities said.

” [In] In this carnage, we see opportunities for growth because we generally believe the tech sector will grow about 20% in 2023 from current levels with big tech, software, and semi-finalists despite wild/federal cards,” analyst Dan Ives wrote in a published note. Also, yesterday Only, there have been updates indicating that Apple’s main chip supplier, TSMC, will begin mass production of 3nm chips this week.

This means that Apple The main customer of the new operation, it may be used first in the upcoming M2 Pro chips which are expected to power the updated MacBook Pro and Mac mini models. According to the new report of DigiTimesTSMC will start Mass production of the next generation 3nm chip on Thursday, December 29, in line with reports earlier this year that 3nm mass production would begin later in 2022.

Apple is currently using TSMC’s 4nm process in the A16 Bionic chip in the iPhone 14 Pro series, but it could switch to 3nm as soon as next year. The ‌M2‌ Pro chip is expected to debut in updated 14-inch and 16-inch MacBook Pros early next year and possibly Mac Studio and ‌Mac mini‌ models, according to reports.