Apple to maintain current iPhone production as competitors gain momentum

Yahoo Finance tech editor Dan Howley discusses Apple's plans for iPhone production as well as the tech giant raising its wages in an effort to stave off unionization.

Video transcript

DAVE BRIGGS: All right, a big day in Apple News now. More money for employees, but fewer phones for consumers. Apple will reportedly make the same number of iPhones in 2022 as it did last year, or around 20 million fewer than analysts expected. Dan Howley is here with the latest. Dan, let's start with the why they're making fewer. Is it supply chain issues? Is it chip shortage? Is it something else altogether?

DAN HOWLEY: Yeah, it's likely have to do with a combination of those, right? The supply chain, as well as inflation. Obviously, as inflation rises, people are going to be less likely to spend $1,000 on a smartphone. Maybe they'll hold onto it for another year. But don't forget that we had those lockdowns in China. Apple said that that would be a $4 billion to $8 billion hit to their bottom line in the coming quarter, or the current quarter. So what we're looking at is a combination of that and then some of this issue going on with inflation.

So I think that really is where we're getting that 20 million number. Don't forget, though, this doesn't mean that the entire next iPhone is basically kaput. It's that the next iPhone is available starting from September, usually, through that January, through that fiscal year. So then we see the iPhone continue on into 2023. And then production numbers could change if there's any kind of difference in kind of the economy at that point, as far as inflation goes.

So I don't think that that number necessarily portends anything particularly bad for this phone. I just think that the economy is going through a lot of issues right now. People are dealing with a lot of their own private issues, as far as inflation goes in their own spending. So I think that's where this 20 million number comes in.

SEANA SMITH: And Dan, speaking of inflation, we've seen a couple of companies being forced or being pressured to raise their pay. Now, Apple, I don't know if they were pressured to, but Apple is coming out, saying that they're actually going to pay their employees more. What do you make of that move?

DAN HOWLEY: Yeah, I think this is basically a way for them to almost bow to pressure that employees are putting on them in both Apple stores, as well as at the corporate offices, right? There's a return to office mandate that Apple had put in place three days a week. You have to be inside the office. A lot of employees pushed back on that. Apple usually is pretty quiet as far as any kind of rumblings when it comes to employees, especially on the actual Apple Park side of things, the Apple headquarters side of things. So hearing those kinds of rumblings about that three-day workweek, obviously, an issue.

And then you have the people in the Apple stores who are actually trying to unionize. And so, that's a larger issue that Apple is trying to contend with now. And they're trying to put that-- kind of tamp down on that by saying, no, no, we'll give you more money. It's not a huge boost, but it is a boost. I don't necessarily know, though, if that's going to stop any kind of unionization talk. There has been reports-- there have been reports about Apple trying to push down on that, trying to get managers to look at employees, trying to say, look, you're not going to be able to get good benefits if you go into a union, things along those lines.

DAVE BRIGGS: Yeah, Apple pays well, and working conditions are comparatively great when you look at the industry. That union has really been a whisper, hasn't it, in the retail stores.

DAN HOWLEY: Well, it has been compared to the number of stores that they have. But the very fact that it's even happening is pretty important, just because this isn't like working at a Best Buy or something like that, where it's just, like, this faceless corporate entity. When you work at-- many people that work at Apple stores that at least I've spoken to or know, it's kind of a career path for them. So that's not something you normally hear about from Apple in that respect. So I think the unionization talk is definitely something to keep an eye on.

DAVE BRIGGS: All right, Dan Howley. Thank you, sir. Appreciate it.