Tech stocks have endured a brutal year so far, but asset manager Patrick Armstrong believes investor interest in Big Tech could reignite next year. Armstrong, who is chief investment officer at wealth manager Plurimi Wealth, has put his money where his mouth is: his firm owns shares in Google parent Alphabet and Apple . “I do think Alphabet and Apple are [going to retain] their dominant market shares. I do think they have pricing power, but they are consumer-focused stocks and consumers are going to be in a little bit more of a difficult environment next year,” Armstrong told CNBC Pro Talks last week. Despite this, he said he expects these sorts of companies to generate returns of around 10% next year, “which will be attractive versus probably an index that is not going to do too much.” The stock market has been plagued by broad risk-off sentiment this year, as investors rotated out of growth stocks amid soaring inflation, interest rate hikes and other headwinds that have left investors clamoring for safer bets. Tech stocks have borne the brunt of this carnage, with the tech-heavy Nasdaq Composite down around 30% this year. And Big Tech has not been spared either; shares in Alphabet are down 32% this year, while Apple has lost about 18% of its market cap in the same period. Tech stocks have pared some losses since hitting their lows, but investor confidence in the sector remains shaky amid several bouts of bear market rallies that fizzled out quickly. But Armstrong, whose Plurimi AI Global Equity Strategy fund beat the MSCI World index to rise 8.2% in October, has a more optimistic take. ‘Everyone wants to own’ Big Tech “Going into year-end, I think Big Tech as a whole is going to see investors allocating to it. I do think there will be a tailwind from flows that everyone wants to own the big-cap tech companies going into next year. So, I wouldn’t want to bet against any of them in the next month,” he said. Within the space, he expects Apple’s share price to trend higher in the next 12 months, driven by earnings growth. “I think high single-digit, low double-digit returns for Apple, I’ll be comfortable with that. They are not going to slow down their share buybacks, which will help the [earnings per share] numbers as well,” Armstrong added. He is not the only one who’s bullish on Apple. Some 74% of analysts covering the stock rate it a buy and give the stock average potential upside of 18.6%, according to FactSet data. Alphabet is even more highly rated by analysts. Over 90% of analysts covering the stock have a buy rating on it, and they give the stock average potential upside of 28.9%.
Elon Musk on Monday claimed that Apple has “threatened” to pull Twitter from its iOS app store, a move that could be devastating to the company Musk just acquired for $44 billion.
“Apple
(AAPL) has also threatened to withhold Twitter from its App Store, but won’t tell us why,” Musk said in one of several tweets Monday taking aim at Apple
(AAPL) and its CEO for alleged moves that could undermine Twitter’s business.
In another tweet, Musk claimed that Apple has mostly stopped advertising on Twitter. “Do they hate free speech in America,” he said, in an apparent reference to his oft-stated desire to bolster his idea of free speech on the platform. “What’s going on here [Apple CEO Tim Cook]?” Musk added in a follow-up tweet. He also criticized Apple’s size, claimed it engages in “censorship,” and called out the 30% transaction fee Apple charges large app developers to be listed in its app store.
The tweetstorm highlights the tenuous relationship between Musk and Apple, which along with Google serves as the major gatekeepers for mobile applications. Long before taking over Twitter, the Tesla CEO said that when the car company was struggling, he considered selling the company to Apple, but that Cook refused to take a meeting with him.
Removal from Apple’s app store, or that of Google, would be detrimental to Twitter’s business, which is already struggling with a loss of advertisers following Musk’s takeover and a rocky initial attempt at expanding its subscription business.
Apple did not immediately respond to a request for comment on Musk’s tweets. The company has previously shown it’s willing to remove apps from its app store over concerns about their ability to moderate harmful content or if they attempt to circumvent the cut Apple takes from in-app purchases and subscriptions.
In January 2021, Apple removed Parler, an app popular with conservatives, including some members of the far right, from its app store following the US Capitol attack over concerns about the platform’s ability to detect and moderate hate speech and incitement. Parler was returned to Apple’s app store three months later after updating its content moderation practices.
In its official app store review guidelines, Apple lists various safety parameters that apps must adhere to in order to be included in the store, including an ability to prevent “content that is offensive, insensitive, upsetting, intended to disgust, in exceptionally poor taste, or just plain creepy” such as hate speech, pornography and terrorism. “If you’re looking to shock and offend people, the App Store isn’t the right place for your app,” the guidelines state.
Various civil society groups, researchers and other industry watchers have raised concerns about Twitter’s ability to effectively moderate harmful content and maintain the platform’s safety following widespread layoffs and mass employee exits at the company. Musk has also claimed he wants to amplify “free speech” on the platform and has begun to restore some accounts that were previously banned or suspended for repeatedly violating Twitter’s rules. Musk himself has shared a conspiracy theory and several other controversial tweets since taking over as Twitter’s owner.
Musk, long a prolific and antagonistic tweeter, has not let up at all since taking over the company. And what it may have lost in revenue, he has claimed it has made up for in engagement. Part of the strategy appears to be relentlessly taking aim at enemies, either of him personally or of “free speech.”
In an interview with CBS earlier this month, Cook was asked whether there are any ways in which Twitter could change that would cause Apple to remove it from the app store. “They say that they’re going to continue to moderate and so … I count on them to do that,” Cook responded. “Because I don’t think that anybody really wants hate speech on their platform. So I’m counting on them to continue to do that.”
In an op-ed published in the New York Times last week, Twitter’s former head of trust and safety, Yoel Roth, who left the company earlier this month, suggested that Twitter had already begun to receive calls from app store operators following Musk’s takeover. Roth said the company’s failure to adhere to Google and Apple’s app store rules could be “catastrophic.”
And last weekend, the head of Apple’s app store, Phil Schiller, deleted his Twitter account.
While the state of Apple and Twitter’s relationship is unclear, the iPhone maker was running Black Friday ads on the platform as recently as last Thursday, according to posts viewed by CNN.
Many companies have pulled back on digital ad spending in recent months as the economy declined, and Twitter has likely always only been a small portion of Apple’s ad budget. Apple’s impact on Twitter, however, could be much more significant, including if Musk succeeds in shifting its core business to being more reliant on subscription revenue, and potentially has to pay a 30% cut to Apple.
In one tweet Monday, Musk asked his nearly 120 million followers if they know “Apple puts a secret 30% tax on everything you buy through their App Store?” In another tweet, he posted a picture of a highway exit: one lane headed toward “pay 30%,” the other pointed toward “go to war.” An old car labeled “Elon” skidded toward the latter.
U.S. stocks tumbled on Monday as protests in China raised the risks to global growth and Federal Reserve policy makers said more interest-rate increases are needed to control inflation.
How stocks are trading
The Dow Jones Industrial Average was down 523 points, or 1.5%, at 33,824, near its session low.
The S&P 500 SPX, -1.65%
retreated 68 points, or 1.7%, to 3,958.
The Nasdaq Composite shed 195 points, or 1.7%, dropping to 11,031.
U.S. stocks had notched weekly gains last week for the second time in three weeks. The Dow rose 1.8%, the S&P 500 advanced 1.5% and the Nasdaq gained 0.7%.
What’s driving markets
Wall Street started the week in a downbeat mood as traders absorbed the impact of unrest in China and assessed interest-rate commentary by a pair of Fed officials on Monday.
St. Louis Fed President James Bullard told MarketWatch that he favors more aggressive interest-rate hikes to contain inflation, and that the central bank will likely need to keep interest rates above 5% into 2024. Meanwhile, his colleague John Williams, president of the New York Fed, said that U.S. unemployment could climb to as high as 5% next year, versus October’s rate of 3.7%, in response to the central bank’s series of rate hikes.
Overseas, Hong Kong’s Hang Seng Index HSI, -1.57%
closed down by 1.6% and most equity indexes across Asia also fell, with the exception of India’s, on concerns about unrest in China. Those concerns also spilled over into commodity markets, where West Texas Intermediate crude for January delivery CLF23, +0.93%
briefly fell to less than $74 per barrel before recovering and settling at $77.24 a barrel on the New York Mercantile Exchange. Meanwhile, copper prices HG00 were off 0.9% at $3.594 per pound.
“What people are worried about is the potential for protests in China to spread and whether the population is reaching its breaking point,” said Derek Tang, an economist at Monetary Policy Analytics in Washington. “At the same time, Fed speak is ramping up and the message is there’s more hikes to come. So investors aren’t finding relief.”
Signs that economic activity in China will continue to be disrupted by the protests or by additional anti-COVID measures will likely continue to weigh on commodity prices, analysts said. Meanwhile, concerns about global growth helped to support government bond markets earlier on Monday, when the yield on the 10-year note TMUBMUSD10Y, 3.693%
briefly traded at its lowest level since October.
The unprecedented waves of protest in China “have caused ripples of unease across financial markets, as worries mount about repercussions for the world’s second-largest economy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “As demonstrations spread across the country from Beijing to Xinjiang and Shanghai, reflecting rising anger about the zero-Covid policy, a sustained recovery in demand across the vast country appears even further away.”
But the news wasn’t all bad: Reports of strong online Black Friday sales helped boost shares of Amazon.com Inc. AMZN, +0.29%,
which were up 0.6%.
Investors can expect more information about the health of the U.S. economy in what’s shaping up to be a busy week for U.S. economic data: Later this week, investors will receive the ADP employment report followed by the November jobs report. Revised data on third-quarter gross domestic product is due on Wednesday, along with the Fed’s Beige Book report. Federal Reserve chair Jerome Powell is set to speak publicly on Wednesday, and a closely watched gauge of inflation is due on Thursday.
Shares of some of China’s biggest technology companies saw their U.S.-traded shares surge on Monday despite the unrest at home. Shares of Alibaba Group BABA, +0.44%
and Tencent Holdings TCEHY, +2.02%
were up 0.6% and 1.2%, respectively, while the KraneShares CSI China Internet ETF KWEB, +3.77%
was 3.7% higher.
Widespread protests across China over the government’s zero-COVID policy dominated pandemic headlines Monday, with Anthony Fauci, President Joe Biden’s chief medical adviser, weighing in with the view that the strategy does not make public-health sense.
China’s biggest challenge is low vaccination rates — and a vaccine that has not been “particularly effective at all” compared with the ones being used in the West that are made by Pfizer PFE, +0.50%
and its German partner BioNTech BNTX, +5.68%
and by Moderna MRNA, +1.08%,
said Fauci, who is retiring next month.
Fauci recalled that when New York hospitals were overwhelmed by COVID cases three years ago, the decision was made to introduce restrictions, such as social distancing and shutdowns, to help flatten the curve of infections. But he noted that it was a temporary move aimed at buying time to get more people vaccinated and move personal protective equipment to where it was needed.
The first vaccine was distributed in the U.S. in December 2020.
“It seems that in China, it was just a very, very strict, extraordinary lockdown where you lock people in the house, but without, seemingly, any endgame to it,” said Fauci, who is also head of the National Institute of Allergy and Infectious Diseases.
Fauci said one mistake the Chinese government has made is to refuse outside vaccines. “But also, interestingly, they did not, for reasons that I don’t fully appreciate, protect the elderly by making sure the elderly got vaccinated,” he said. “So if you look at the prevalence of vaccinations among the elderly, that was almost counterproductive. The people you really needed to protect were not getting protected.”
The protests have roiled financial markets and caused oil prices to erase their entire year-to-date gain. In a highly unusual move, protesters in Shanghai called for China’s powerful leader Xi Jinping to resign, an unprecedented rebuke as authorities in at least eight cities struggled Sunday to suppress demonstrations that represent a rare direct challenge to the ruling Communist Party, as the Associated Press reported.
The BBC said reporter Ed Lawrence, who was arrested while covering protests, was beaten and kicked by police while in custody.
“We have had no explanation or apology from the Chinese authorities, beyond a claim by the officials who later released him that they had arrested him for his own good in case he caught COVID from the crowd,” the broadcaster said in a statement. “We do not consider this a credible explanation.”
In a rare show of defiance, crowds in China gathered for a third night as protests against COVID restrictions spread to Beijing, Shanghai and other cities. People held blank sheets of paper, symbolizing censorship, and demanded that the Chinese president, Xi Jinping, step down. Photo: Noel Celis/Agence France-Presse/Getty Images
In the U.S., known cases of COVID are rising again with the daily average standing at 41,997 on Sunday, according to a New York Times tracker, up 6% from two weeks ago.
Cases are currently rising in 22 states, plus Washington, D.C., and Guam, but are falling elsewhere.
The daily average for hospitalizations is up 4% to 29,053. Hospitalizations are rising in 23 states, the tracker shows.
• The World Health Organization said Monday it is recommending the term “mpox” as a new name for monkeypox disease and that it would use both names for a year while “monkeypox” is phased out. “When the outbreak of monkeypox expanded earlier this year, racist and stigmatizing language online, in other settings and in some communities was observed and reported to WHO,” the agency said in a statement. “In several meetings, public and private, a number of individuals and countries raised concerns and asked WHO to propose a way forward to change the name.” The WHO has responsibility for assigning names to new — and exceptionally, to existing — diseases, under the International Classification of Diseases and the WHO Family of International Health Related Classifications through a consultative process that includes WHO member states, it explained. The new name was decided upon following consultations with global experts, it said.
Residents in Shanghai received the world’s first inhaled COVID-19 vaccine by taking sips from a cup. WSJ’s Dan Strumpf explains how the new type of vaccine works and what it means for China’s reopening. Photo: Associated Press/Shanghai Media Group
• Unrest at one of China’s biggest manufacturing centers may cause a production shortfall this year of possibly 6 million Apple iPhone Pros, according to a source cited by Bloomberg. The Foxconn Technology 2354 facility in Zhengzhou, which makes the majority of Apple’s premium phones, has been struggling for weeks as workers rebel against COVID lockdown policies. Apple AAPL, -2.13%
recently lowered its overall production target from 90 million units to 87 million units. However, Foxconn believes it can make up any shortfall from Zhengzhou in 2023.
• A blood-thinning drug called Apixaban, which has been used for patients recovering from COVID, does not work and can cause major bleeding, according to new research reported by the Guardian. The anticoagulant, given to patients when they are discharged from a hospital after being treated for moderate or severe COVID, is widely used by hospitals across the U.K.’s National Health Service. However, the government-funded Heal-Covid trial has found that the drug does not work. Charlotte Summers, the chief investigator of the trial, said: “These first findings from Heal-Covid show us that a blood-thinning drug, commonly thought to be a useful intervention in the post-hospital phase, is actually ineffective at stopping people dying or being readmitted to hospital.”
The U.S. leads the world with 98.6 million cases and 1,079,199 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 228.4 million people living in the U.S., equal to 68.8% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 37.6 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 12.1% of the overall population.
Much of Twitter’s ad sales team has been fired or pushed out. Large companies from General Mills to Macy’s have paused advertising on the platform, with more potentially following suit after new owner Elon Musk’s decision to restore the account of former President Donald Trump and other controversial figures. And any cursory scroll of the platform will likely show you fewer big brand ads.
That would all seem like horrible news for a business that generates the lion’s share of its revenue from advertising. But Musk may not care.
The Tesla CEO has previously said he “hates advertising” and, as Twitter’s owner, professed a desire to make the company more reliant on subscription revenue than advertising dollars. Twitter has always struggled to turn its outsized influence in media, politics, and culture into a highly successful advertising business. And without needing to please advertisers, the billionaire would be freer to implement his “free speech” vision for Twitter.
“I’ve always thought that a move to a subscription business would make sense for Twitter … it’s never been a great advertising platform,” said Larry Vincent, associate professor of marketing at USC’s Marshall School of Business. Twitter’s advertising business has long been smaller than that of rivals like Facebook, in part because it didn’t offer the same level of user targeting.
To successfully overhaul Twitter into a thriving subscription business would be to buck the trend of many other media properties that have struggled with the model. And Musk’s attempts right out of the gate have faltered. An updated, $8-per-month version of the Twitter Blue subscription service that allowed users to buy a verification checkmark had to be halted after just two days when it was abused to impersonate prominent people (notably Musk himself), businesses, and government agencies. Musk initially said he would relaunch the service on November 29, but on Monday suggested he might further delay it “until there is high confidence of stopping impersonation.”
Some industry watchers have also questioned whether, given Twitter’s somewhat niche status as a relatively small platform used largely by members of the media, politicians and academics, such a subscription service could be widely adopted. Even if all 217 million daily users Twitter reported having at the end of 2021 signed up for Musk’s $8 per month subscription, the annual revenue would still be less than a quarter of the size of rival Meta’s.
Still, some industry insiders have reason to think he can pull it off. “Twitter over the last month has been far more entertaining than Netflix and easily worth $8,” Roy Price, the founder of Amazon Studios, said in a tweet Saturday. Salesforce CEO Marc Benioff said in a tweet, “don’t underestimate” Musk. And Twitch co-founder Justin Kan tweeted that he thinks Twitter is “likely to survive just fine (and potentially thrive!)” in part because, unlike some high-profile users who have announced their departure from the platform, most regular users likely don’t care about who’s leading the platform and how.
Indeed, Musk’s shift away from advertising and toward a subscription model could work if Twitter can survive having its entire revenue decimated beforehand, keep its systems up and running, avoid violating laws around copyright infringement and hate speech, and also remain in good standing with Apple and Google, which control the app stores on which Twitter depends.
The stakes to pull it off are significant for Musk. After borrowing billions of dollars to finance the Twitter takeover, Musk is up against the clock to turn what was already a struggling business into a company that can generate enough cash flow to pay back his debt. He may also risk his reputation as “a gifted and audacious entrepreneur who made Tesla work against widespread doubts and naysaying,” said Robert Bruner, professor of business administration at University of Virginia’s Darden School of Business.
Whether he likes advertising or not, the business made up 90% of Twitter’s revenue prior to Musk’s takeover and replacing it won’t be an immediate shift.
In the wake of the chaos at Twitter in recent weeks, there has been talk of brands quitting the platform out of concern that their ads could end up next to objectionable content. But that may not be the only or even primary reason advertisers have walked away — or why attracting new ones could be tricky. Advertisers are also likely on edge about Twitter’s stability, as users and former employees raise concerns that the mass exodus of staff could leave the platform vulnerable to glitches and outages.
Brands may also be miffed that many of Twitter’s ad sales employees who managed their campaigns have been fired or pushed out, including after another round of layoffs and exits Monday.
Large digital platforms “have experienced professionals out there who develop relationships with these advertisers,” Vincent said. “When you let go of a staff that was as veteran as Twitter’s and there’s no one there to respond to those [brands], you basically reduce the value of the ad platform.”
By bringing Trump and other controversial figures back to the platform, Twitter may have greater appeal to the right-leaning advertisers that do business on alternative platforms like Trump’s Truth Social. While there is a market to advertise to “people buying gold, people buying survivalist home kits, guns and weapons,” Twitter has long been known as a more politically neutral, if not somewhat left-leaning, platform and may struggle to attract such companies, said Michael Serazio, a communications professor at Boston College.
Musk is also going to have to contend with potential pressure from regulators, as well as the app store operators at Apple and Google, if he wants to succeed in turning Twitter’s business around. A group of US senators has already called on the Federal Trade Commission to investigate Musk’s Twitter over potential violations of the company’s 2011 consent decree. And Europe’s Digital Services Act may impose limits on just how free Musk’s “free speech” Twitter can be.
In an op-ed published in the New York Times last week, Twitter’s former head of trust and safety, Yoel Roth, who left the company earlier this month, said the company’s failure to adhere to Google and Apple’s app store rules could be “catastrophic.” The app stores have previously removed social media apps for failing to protect their users from harmful content, and Roth suggested that Twitter had already begun to receive calls from app store operators following Musk’s takeover. Over the weekend, the head of Apple’s app store, Phil Schiller, deleted his Twitter account.
Most importantly, Twitter will have to keep users invested in the platform if Musk’s subscription strategy is going to work. And it’s not just existing users — Musk will also need to attract new people to the platform, which has long struggled to break out of its niche status and grow its user base, by ensuring it’s filled with must-read content.
In the weeks since Musk took over Twitter — which was immediately followed by an uptick in hateful content — there has been much hand-waving from users about moving to other platforms, and several high-profile accounts have announced their exits, including director Shonda Rimes and model Gigi Hadid. But it’s not clear that there has been a broad drop-off in the user base; instead, Musk has claimed in tweets that platform usage is at an all-time high.
So long as Musk can keep Twitter functioning properly despite having fewer employees, many users will likely stick around, perhaps even more so following the return of controversial accounts that tend to make news with incendiary comments on the platform. Musk himself has pointed out that even as people fret about the demise of Twitter, they’re doing it on the platform itself. And the billionaire has proposed making it easier for creators to earn money on the platform, which could also drive usage.
Even still, there is no guarantee that continuing to capture the online world’s attention will translate into subscription payments or other revenue growth.
“Even as both Musk and Trump are driven by the gravity of the attention economy, it doesn’t mean that they’ll be able to cash in on it,” Serazio said. He said Musk likely made the decision to restore Trump’s account because “it was going to cause headlines, it was going to cause attention,” adding that “the attention won’t save Twitter … but I don’t know that [Musk] has any other strategy other than the attention economy, even if he doesn’t know how to profit from it.”
A violent workers’ revolt at the world’s largest iPhone factory this week in central China is further scrambling Apple’s strained supply and highlighting how the country’s stringent zero-Covid policy is hurting global technology firms.
The troubles started last month when workers left the factory campus in Zhengzhou, the capital of the central province of Henan, due to Covid fears. Short on staff, bonuses were offered to workers to return.
But protests broke out this week when the newly hired staff said management had reneged on their promises. The workers, who clashed with security officers wearing hazmat suits, were eventually offered cash to quit and leave.
Analysts said the woes facing Taiwan contract manufacturing firm Foxconn, a top Apple supplier which owns the facility, will also speed up the pace of diversification away from China to countries like India.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the ongoing production shutdown in Foxconn’s sprawling campus in the central Chinese city of Zhengzhou was an “albatross” for Apple.
“Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he said.
Demand for iPhone 14 units during the Black Friday holiday weekend was much higher than supply and could cause major shortages leading into Christmas, Ives said, adding that the disruptions at Foxconn, which started in October, have been a major “gut punch” to Apple this quarter.
In a note Friday, Ives said Black Friday store checks show major iPhone shortages across the board.
“Based on our analysis, we believe iPhone 14 Pro shortages have gotten much worse over the last week with very low inventories,” he wrote. “We believe many Apple Stores now have iPhone 14 Pro shortages … of up to 25%-30% below normal heading into a typical December.”
Ming-Chi Kuo, an analyst at TF International Securities, wrote on Twitter that more than 10% of global iPhone production capacity was affected by the situation at the Zhengzhou campus.
Earlier this month, Apple said shipments of its latest lineup of iPhones would be “temporarily impacted” by Covid restrictions in China. It said its assembly facility in Zhengzhou, which normally houses some 200,000 workers, was “currently operating at significantly reduced capacity,” due to Covid curbs.
The Zhengzhou campus has been grappling with a Covid outbreak since mid-October that caused panic among its workers. Videos of people leaving Zhengzhou on foot wentviral on Chinese social media in early November, forcing Foxconn to step up measures to get its staff back.
To entice workers, the company said it had quadrupled daily bonuses for workers at the plant this month. A week ago, state media reported that 100,000 people had been successfully recruited to fill the vacant positions.
But on Tuesday night, hundreds of workers, mostly new hires, began to protest against the terms of the payment packages offered to them and also about their living conditions. Scenes turned increasingly violent into the next day as workers clashed with a large number of security forces.
By Wednesday evening, the crowds hadquieted, with protesters returning to their dormitories on the Foxconn campus after the company offered to pay the newly recruited workers 10,000 yuan ($1,400), or roughly two months of wages, to quit and leave the site altogether.
In a statement sent to CNN Business on Thursday after the protests had wound down, Apple said it had a teamon the ground at the Zhengzhou facility working closely with Foxconn to ensure employees’ concerns were addressed.
Even before this week’s demonstrations, Apple had started making the iPhone 14 in India, as it sought to diversify its supply chain away from China.
The announcement in late September marked a major change in its strategy and came at a time when US tech companies were looking for alternatives to China, the world’s factory for decades.
The Wall Street Journal reported earlier this year that the company was looking to boost production in countries such as Vietnam and India, citing China’s strict Covid policy as one of the reasons.
Kuo said on Twitter that he believed Foxconn would speed up the expansion of iPhone production capacity in India as a result of Zhengzhou lockdowns and resulting protests.
The production of iPhones by Foxconn in India will grow by at least 150% in 2023 compared to 2022, he predicted, and the longer term goal would be to ship between 40% and 45% of such phones from India, compared to less than 4% now.
A Black Friday sale sign in the clothing department of the Macy’s flagship store on Black Friday in New York, US, on Friday, Nov. 25, 2022.
Jeenah Moon | Bloomberg | Getty Images
This will likely end up the biggest Black Friday ever online.
Overall online sales for the day after Thanksgiving are expected to top $9 billion, according to Adobe, which tracks sales on retailers’ websites. That would be a record.
Through 6 p.m. ET, shoppers spent $7.28 billion at websites. That number could balloon to as much as $9.2 billion before the day is done, Adobe said.
The record-breaking spending comes on the heels of a strong day of Thanksgiving shopping, in which consumers shelled out an all-time high $5.29 billion online, up 2.9% year-over-year. Typically, shoppers spend about $2 billion to $3 billion online in a day, according to Adobe.
The company said shoppers were picking up Apple products such as watches and AirPods, smart speakers and televisions, espresso machines, and gaming consoles, as well as toys from Funko, Hatchimals and Squishmallows.
Adobe noted that mobile shopping also hit a record high this year, with sales from smartphones accounting for 55% of online sales on Thanksgiving Day. These sales are expected to account for 53% of total Black Friday sales, the company predicts.
Additionally, strong discounts enticed inflation-weary consumers to put more items in their carts. The average order volume was up 12% during the season. Toys, in particular, drove significant demand, with deals as high as 33% off.
For retailers, these numbers may be a promising indicator about the weeks ahead. Early holiday forecasts have been muted. Target,Macy’s, Nordstrom and other companies reported a lull in sales in late October and early November. Consumer sentiment has weakened in the past month as inflation hovers near four-decade highs.
Adobe expects Cyber Week, the five days from Thanksgiving Day through Cyber Monday, will generate around $34.8 billion in online spending, up nearly 3% compared to 2021. Cyber Monday is expected to be the biggest online shopping day, with sales slated to top $11.2 billion, the company forecast.
— CNBC’s Melissa Repko contributed to this report.
Pedestrians walk past the NASDAQ MarketSite in New York’s Times Square.
Eric Thayer | Reuters
It seems like an eternity ago, but it’s just been a year.
At this time in 2021, the Nasdaq Composite had just peaked, doubling since the early days of the pandemic. Rivian’s blockbuster IPO was the latest in a record year for new issues. Hiring was booming and tech employees were frolicking in the high value of their stock options.
Twelve months later, the landscape is markedly different.
Not one of the 15 most valuable U.S. tech companies has generated positive returns in 2021. Microsoft has shed roughly $700 billion in market cap. Meta’s market cap has contracted by over 70% from its highs, wiping out over $600 billion in value this year.
In total, investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.
Interest rate hikes have choked off access to easy capital, and soaring inflation has made all those companies promising future profit a lot less valuable today. Cloud stocks have cratered alongside crypto.
There’s plenty of pain to go around. Companies across the industry are cutting costs, freezing new hires, and laying off staff. Employees who joined those hyped pre-IPO companies and took much of their compensation in the form of stock options are now deep underwater and can only hope for a future rebound.
IPOs this year slowed to a trickle after banner years in 2020 and 2021, when companies pushed through the pandemic and took advantage of an emerging world of remote work and play and an economy flush with government-backed funds. Private market darlings that raised billions in public offerings, swelling the coffers of investment banks and venture firms, saw their valuations marked down. And then down some more.
Rivian has fallen more than 80% from its peak after reaching a stratospheric market cap of over $150 billion. The Renaissance IPO ETF, a basket of newly listed U.S. companies, is down 57% over the past year.
Tech executives by the handful have come forward to admit that they were wrong.
The Covid-19 bump didn’t, in fact, change forever how we work, play, shop and learn. Hiring and investing as if we’d forever be convening happy hours on video, working out in our living room and avoiding airplanes, malls and indoor dining was — as it turns out — a bad bet.
Add it up and, for the first time in nearly two decades, the Nasdaq is on the cusp of losing to the S&P 500 in consecutive years. The last time it happened the tech-heavy Nasdaq was at the tail end of an extended stretch of underperformance that began with the bursting of the dot-com bubble. Between 2000 and 2006, the Nasdaq only beat the S&P 500 once.
Is technology headed for the same reality check today? It would be foolish to count out Silicon Valley or the many attempted replicas that have popped up across the globe in recent years. But are there reasons to question the magnitude of the industry’s misfire?
It was supposed to be the year of Meta. Prior to changing its name in late 2021, Facebook had consistently delivered investors sterling returns, beating estimates and growing profitably with historic speed.
The company had already successfully pivoted once, establishing a dominant presence on mobile platforms and refocusing the user experience away from the desktop. Even against the backdrop of a reopening world and damaging whistleblower allegations about user privacy, the stock gained over 20% last year.
But Zuckerberg doesn’t see the future the way his investors do. His commitment to spend billions of dollars a year on the metaverse has perplexed Wall Street, which just wants the company to get its footing back with online ads.
The big and immediate problem is Apple, which updated its privacy policy in iOS in a way that makes it harder for Facebook and others to target users with ads.
With its stock down by two-thirds and the company on the verge of a third straight quarter of declining revenue, Meta said earlier this month it’s laying off 13% of its workforce, or 11,000 employees, its first large-scale reduction ever.
“I got this wrong, and I take responsibility for that,” Zuckerberg said.
Mammoth spending on staff is nothing new for Silicon Valley, and Zuckerberg was in good company on that front.
Software engineers had long been able to count on outsized compensation packages from major players, led by Google. In the war for talent and the free flow of capital, tech pay reached new heights.
Recruiters at Amazon could throw more than $700,000 at a qualified engineer or project manager. At gaming company Roblox, a top-level engineer could make $1.2 million, according to Levels.fyi. Productivity software firm Asana, which held its stock market debut in 2020, has never turned a profit but offered engineers starting salaries of up to $198,000, according to H1-B visa data.
Fast forward to the last quarter of 2022, and those halcyon days are a distant memory.
Layoffs at Cisco, Meta, Amazon and Twitter have totaled nearly 29,000 workers, according to data collected by the website Layoffs.fyi. Across the tech industry, the cuts add up to over 130,000 workers. HPannounced this week it’s eliminating 4,000 to 6,000 jobs over the next three years.
For many investors, it was just a matter of time.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Brad Gerstner, a tech investor at Altimeter Capital, wrote last month.
Gerstner’s letter was specifically targeted at Zuckerberg, urging him to slash spending, but he was perfectly willing to apply the criticism more broadly.
“I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion,” Gerstner wrote.
Activist investor TCI Fund Management echoed that sentiment in a letter to Google CEO Sundar Pichai, whose company just recorded its slowest growth rate for any quarter since 2013, other than one period during the pandemic.
“Our conversations with former executives suggest that the business could be operated more effectively with significantly fewer employees,” the letter read. As CNBC reported this week, Google employees are growing worried that layoffs could be coming.
Those special purpose acquisition companies, or blank-check entities, created so they could go find tech startups to buy and turn public were a phenomenon of 2020 and 2021. Investment banks were eager to underwrite them, and investors jumped in with new pools of capital.
SPACs allowed companies that didn’t quite have the profile to satisfy traditional IPO investors to backdoor their way onto the public market. In the U.S. last year, 619 SPACs went public, compared with 496 traditional IPOs.
This year, that market has been a bloodbath.
The CNBC Post SPAC Index, which tracks the performance of SPAC stocks after debut, is down over 70% since inception and by about two-thirds in the past year. Many SPACs never found a target and gave the money back to investors. Chamath Palihapitiya, once dubbed theSPAC king, shut down two deals last month after failing to find suitable merger targets and returned $1.6 billion to investors.
Then there’s the startup world, which for over a half-decade was known for minting unicorns.
Last year, investors plowed $325 billion into venture-backed companies, according to EY’s venture capital team, peaking in the fourth quarter of 2021. The easy money is long gone. Now companies are much more defensive than offensive in their financings, raising capital because they need it and often not on favorable terms.
“You just don’t know what it’s going to be like going forward,” EY venture capital leader Jeff Grabow told CNBC. “VCs are rationalizing their portfolio and supporting those that still clear the hurdle.”
The word profit gets thrown around a lot more these days than in recent years. That’s because companies can’t count on venture investors to subsidize their growth and public markets are no longer paying up for high-growth, high-burn names. The forward revenue multiple for top cloud companies is now just over 10, down from a peak of 40, 50 or even higher for some companies at the height in 2021.
The trickle down has made it impossible for many companies to go public without a massive markdown to their private valuation. A slowing IPO market informs how earlier-stage investors behave, said David Golden, managing partner at Revolution Ventures in San Francisco.
“When the IPO market becomes more constricted, that circumscribes one’s ability to find liquidity through the public market,” said Golden, who previously ran telecom, media and tech banking at JPMorgan. “Most early-stage investors aren’t counting on an IPO exit. The odds against it are so high, particularly compared against an M&A exit.”
There have been just 173 IPOs in the U.S. this year, compared with 961 at the same point in 2021. In the VC world, there haven’t been any deals of note.
“We’re reverting to the mean,” Golden said.
An average year might see 100 to 200 U.S. IPOs, according to FactSet research. Data compiled by Jay Ritter, an IPO expert and finance professor at the University of Florida, shows there were 123 tech IPOs last year, compared with an average of 38 a year between 2010 and 2020.
Buy now, pay never
There’s no better example of the intersection between venture capital and consumer spending than the industry known as buy now, pay later.
Companies such as Affirm, Afterpay (acquired by Block, formerly Square) and Sweden’s Klarna took advantage of low interest rates and pandemic-fueled discretionary incomes to put high-end purchases, such as Peloton exercise bikes, within reach of nearly every consumer.
Affirm went public in January 2021 and peaked at over $168 some 10 months later. Affirm grew rapidly in the early days of the Covid-19 pandemic, as brands and retailers raced to make it easier for consumers to buy online.
By November of last year, buy now, pay later was everywhere, from Amazon to Urban Outfitters‘ Anthropologie. Customers had excess savings in the trillions. Default rates remained low — Affirm was recording a net charge-off rate of around 5%.
Affirm has fallen 92% from its high. Charge-offs peaked over the summer at nearly 12%. Inflation paired with higher interest rates muted formerly buoyant consumers. Klarna, which is privately held, saw its valuation slashed by 85% in a July financing round, from $45.6 billion to $6.7 billion.
The world’s richest person — even after an almost 50% slide in the value of Tesla — is now the owner of Twitter following an on-again, off-again, on-again drama that lasted six months and was about to land in court.
Musk swiftly fired half of Twitter’s workforce and then welcomed former President Donald Trump back onto the platform after running an informal poll. Many advertisers have fled.
And corporate governance is back on the docket after this month’s sudden collapse of cryptocurrency exchange FTX, which managed to grow to a $32 billion valuation with no board of directors or finance chief. Top-shelf firms such as Sequoia, BlackRock and Tiger Global saw their investments wiped out overnight.
“We are in the business of taking risk,” Sequoia wrote in a letter to limited partners, informing them that the firm was marking its FTX investment of over $210 million down to zero. “Some investments will surprise to the upside, and some will surprise to the downside.”
Even with the crypto meltdown, mounting layoffs and the overall market turmoil, it’s not all doom and gloom a year after the market peak.
Golden points to optimism out of Washington, D.C., where President Joe Biden’s Inflation Reduction Act and the Chips and Science Act will lead to investments in key areas in tech in the coming year.
Funds from those bills start flowing in January. Intel, Micron and Taiwan Semiconductor Manufacturing Company have already announced expansions in the U.S. Additionally, Golden anticipates growth in health care, clean water and energy, and broadband in 2023.
“All of us are a little optimistic about that,” Golden said, “despite the macro headwinds.”
Customers shop at the Apple Fifth Avenue store for the release of the Apple iPhone 14 in New York City, September 16, 2022.
Andrew Kelly | Reuters
It’s Black Friday and the official start of the holiday shopping season, and there’s a new iPhone 14 for consumers in the market looking to upgrade their Apple device. From better cameras and longer battery life to faster chips, there are plenty of features consumers will consider when buying a new iPhone — that is, if you can find one amid what’s looking like a season short on supply of some of Cupertino’s newest models.
One new safety feature that has been getting a lot of attention is emergency satellite connectivity. Cybersecurity may not be among the top selling points, but the new iPhone and iOS16 do have some significant security upgrades, too.
The focus on security is nothing new from Apple, which has made user privacy one of its key messages for years, regularly adding new security features within iOS updates and on new phone models, like Face ID facial recognition, app tracking prevention and private browsing.
Improved low-light photo abilities and the extended battery life may have appeal than security upgrades on the new Apple iPhone 14, iPhone 14 Plus, iPhone 14 Pro or iPhone 14 Pro Max. But from the new satellite connectivity features to Apple’s first-ever eSIM-only phones, the iPhone 14 offers a range of new technologies to further protect your privacy, including the brand new Lockdown Mode.
Lockdown: Apple’s most extreme security mode
All models of the iPhone 14 come preinstalled with iOS 16, which features a new form of protection called Lockdown Mode. This tool enables an extreme level of protection that prevents malware from accessing your phone, blocking most message attachment types, FaceTime calls, and more. While in Lockdown Mode, phone calls, plain text messages and emergency features will continue to work.
You are not expected to use this feature, unless you are, or soon plan to become, a CEO or head of state.
“It’s only meant for a small section of users who might be targeted by a nation-state threat actor,” said Kathleen Moriarty, chief technology officer at the Center for Internet Security. “That being said, it could be a CEO for a company … [an] official in the government, and that ability to lockdown the device and prevent execution or access to data on your phone could be critical.”
But the feature may be enticing to a broader base of security-minded individuals.
Research has found that more than 90% of unknown security bugs live in code that is rarely executed, said Justin Cappos, associate professor of Computer Science and Engineering at New York University Tandon School of Engineering and a member of New York University’s Center for Cybersecurity. Lockdown Mode does remove that risk, while making the phone experience “a little more inconvenient” for most users.
After testing out Lockdown Mode, Cappos said the only visual changes he noticed were fonts appearing differently and the icons for health apps not displaying correctly. And due to a very similar user experience and additional security benefits, he plans to use Lockdown Mode as his default and only exempt apps if necessary.
Android phones have offered a function called “Lockdown” since 2018, when the feature became available on Android 9. Designed to block all biometric security and voice recognition, it operates a bit differently than the Apple feature.
Fingerprint, facial and voice identification disable on the Android in Lockdown to prevent someone from accessing your phone. However, once an Android is unlocked via password, pin or pattern, Lockdown is turned off. While the iPhone keeps your device in Lockdown Mode at all times, the Android only ensures this security if users re-enable the feature every time they unlock their device.
Despite the similar names, Android’s Lockdown is more focused on preventing physical hijacking of a phone. Apple’s approach emphasizes protecting a device against digital threats. Both modes are, in most cases, not meant for daily use by the general public, but features that can help individuals in higher-risk situations.
The switch to eSIM-only phones
Steve Jobs never wanted the original iPhone to have a SIM card tray, and the iPhone 14 models are finally achieving this goal. Apple introduced eSIM cards back in 2018, but the new phone series is the first of its kind to eliminate the SIM card tray entirely and use only eSIM for the U.S. market. All iPhone 14 models purchased in the U.S. are eSIM-only, which enables users to easily connect and transfer their plans digitally.
“It stops someone from physically swapping your SIM card out if you leave your phone unattended. This has been used to steal accounts for high-profile individuals like Jack Dorsey, former CEO of Twitter, and also to steal millions in cryptocurrency,” Cappos said.
Although the physical form of identity theft decreases, there are still security risks to consider before switching to the eSIM-only iPhone 14.
“Carriers cite security concerns such as an attacker taking over your phone number due to there not being a physical SIM card required for a carrier change, just the eSIM already on the phone and an SMS code,” Moriarty said. “At the same time, carriers are also concerned because the eSIM allows for an easier transition between carriers for the end user, which could hurt user retention.”
The Android 9 was the first version of the phone to implement the use of eSIM. The company has shown a growing effort to offer both SIM cards and eSIM on its newer phones, but no Android is eSIM-only.
Emergency SOS via satellite
In efforts to expand upon the iPhone’s safety features, the new lineup offers Emergency SOS via satellite which allows users to directly connect to a satellite and contact emergency services when outside of cellular or Wi-Fi coverage. When Emergency SOS is activated, the phone will prompt questions to assess the user’s situation and direct them where to point their phone in order to connect to a satellite. These questions will be sent to Apple-trained specialists who will then call for help.
There is a potential security issue related to this new feature.
“It certainly makes situations where somebody’s stranded or in dire need a lot safer for that person. But, of course, having additional ways to communicate provides opportunities for surveillance and things like this as well,” Cappos said.
Apple notes that messages are sent in encrypted form but are then decrypted by Apple so that emergency services can step in. Your location will also be shared with Apple and its partners when using this feature.
“It makes you have to trust Apple a little more, but it could also potentially save your life in certain situations,” Cappos said.
Emergency SOS via satellite is launching on iPhone 14 models this month with an iOS 16 software update. However, this feature will only be available in the U.S., including Puerto Rico and the U.S. Virgin Islands, along with Canada. Users will be able to utilize this feature for free for two years from the start of their plan. After that, it could become a paid additional service for iPhone users.
Hiroshi Lockheimer, Google’s senior vice president of Android and other Google services, recently confirmed via Twitter that the company is working on satellite connectivity for the Android 14 operating system, which will require hardware changes from companies that build Android phones.
The U.S. is unlikely to suffer the same surge of COVID-19 infections this winter as it did last year, when the omicron variant first emerged and swept across the country, senior health officials said Tuesday.
On Tuesday, Anthony Fauci, President Joe Biden’s chief medical adviser, addressed reporters for the last time ahead of his retirement, saying that the current combination of infections and vaccinations means there’s “enough community protection that we’re not going to see a repeat of last year at this time.”
But Fauci urged those Americans who have not yet gotten their updated booster to do so quickly, telling them it’s the best one so far. Only 35 million Americans have received the bivalent booster since it was rolled out in September.
“[What] may be the final message I give you from this podium is that please, for your own safety, for that of your family, get your updated COVID-19 shot as soon as you’re eligible,” Fauci said.
The Centers for Disease Control and Prevention has estimated that the new boosters, which target the original virus as well as the latest omicron variants, provide an additional 30% to 56% protection against symptomatic infection, depending on a person’s age, how many prior vaccine shots they have had and when they had them, as the Associated Press reported.
The people who get the greatest benefit from the new booster are those who got two doses of the original COVID-19 vaccine at least eight months earlier and never got a prior booster, said the CDC’s Ruth Link-Gelles, who led the study.
The original shots have offered strong protection against severe disease and death no matter the variant, but their protection against mild infection wanes. The CDC’s analysis has tracked only the first few months of the new boosters’ use, so it’s too early to know how long the added protection against symptomatic infection will last.
But “certainly as we enter the holiday season, personally I would want the most possible protection if I’m seeing my parents and grandparents,” Link-Gelles said. “Protection against infection there is going to be really helpful, because you potentially would stop yourself from getting a grandparent or other loved one sick.”
The Biden administration announced a six-week campaign urging people — especially older people — to get the boosters, saying the shots could save lives as Americans gather for the holidays.
Physicians are reporting high numbers of respiratory illnesses like RSV and the flu earlier than the typical winter peak. WSJ’s Brianna Abbott explains what the early surge means for the winter months. Photo illustration: Kaitlyn Wang
In the U.S., known cases of COVID are rising again, with the daily average standing at 42,220 on Tuesday, according to a New York Times tracker, up 7% from two weeks ago. Cases are rising in 25 states, led by Washington state, where they are up 279% from two weeks ago.
The daily average for hospitalizations is flat at 27,923, while the daily average for deaths is up 3% to 319.
• Employees at the world’s biggest Apple AAPL, +0.59%
iPhone factory were beaten and detained in protests over contract disputes amid antivirus controls, according to witnesses and videos posted on social media Wednesday, as tensions mount over Beijing’s severe zero-COVID strategy, the AP reported. Videos reportedly filmed at the factory in the central city of Zhengzhou showed thousands of people in masks facing rows of police in white protective suits with plastic riot shields. Police kicked and hit one protester with clubs after he grabbed a metal pole that had been used to strike him. Frustrations have boiled over into protests in some parts of China where shops and offices have been closed and millions of people confined to their homes for weeks at a time with little warning. Videos on social media show residents in some areas tearing down barricades set up to enforce neighborhood closures.
Footage shows police in protective suits beating workers at the Foxconn facility in Zhengzhou, China. The world’s biggest Apple iPhone factory had been under COVID-19 lockdowns in recent weeks. Screenshot: Associated Press
• The Ohio Supreme Court has dismissed a lawsuit challenging Gov. Mike DeWine’s authority to end Ohio’s participation in a federal pandemic unemployment aid program ahead of the federal government’s 2021 deadline for stopping the payments, the AP reported. The court’s unanimous decision on Tuesday called the case “moot” without any additional explanation. At issue before the court was a weekly $300 federal payment for Ohioans to offset the economic impact of the coronavirus pandemic. The federal government ended that in September of last year, but DeWine stopped the payments two months earlier, saying the need was over.
• Infections from antibiotic-resistant pathogens known as superbugs have more than doubled in healthcare facilities in Europe, an EU agency said on Thursday, providing further evidence of the wider impact of the COVID pandemic, Reuters reported. The European Center for Disease Prevention and Control said reported cases of two highly drug-resistant pathogens increased in 2020, the first year of the COVID-19 pandemic, then sharply jumped in 2021.
• The National Institutes of Health has set up a website for people to anonymously self-report the results of at-home COVID-19 tests, whether positive or negative. The site, MakeMyTestCount.org, will gather the data and then share the information, stripped of personal identifiers, with the public-health systems that track COVID-19 test results provided by healthcare providers and laboratories. The widespread use of at-home COVID tests in 2022 meant the U.S. had a more limited understanding of COVID surges than in the past.
The U.S. leads the world with 98.4 million cases and 1,077,800 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 228.2 million people living in the U.S., equal to 68.7% of the total population, are fully vaccinated, meaning they have had their primary shots.
Workers at China’s largest iPhone assembly factory were seen confronting police, some in riot gear, on Wednesday, according to videos shared over social media.
The videos show hundreds of workers facing off with law enforcement officers, many in white hazmat suits, on the Foxconn campus in the central Chinese city of Zhengzhou. In the footage, now blocked, some of the protesters could be heard complaining about their pay and sanitary conditions.
The scenes come days after Chinese state media reported that more than 100,000 people had signed up to fill positions advertised as part of a massive recruitment drive held for Foxconn’s Zhengzhou plant.
Apple
(AAPL) has been facing significant supply chain constraints at the assembly facility and expects iPhone 14 shipments to be hit just as the key holiday shopping season begins. CNN has contacted the company for comment on the situation at the plant.
A Covid outbreak last month had forced the site to lock down, leading some anxious factory workers to reportedly flee.
Videos of many people leaving Zhengzhou on foot had gone viral on Chinese social media earlier in November, forcing Foxconn to step up measures to get its staff back. To try to limit the fallout, the company said it had quadrupled daily bonuses for workers at the plant this month.
On Wednesday, workers were heard in the video saying that Foxconn failed to honor their promise of an attractive bonus and pay package after they arrived to work at the plant. Numerous complaints have also been posted anonymously on social media platforms — accusing Foxconn of having changed the salary packages previously advertised.
In a statement in English, Foxconn said Wednesday that “the allowance has always been fulfilled based on contractual obligation” after some new hires at the Foxconn campus in Zhengzhou appealed to the company regarding the work allowance on Tuesday.
Workers were also heard in the videos complaining about insufficient anti-Covid measures, saying workers who tested positive were not being separated from the rest of the workforce.
Foxconn said in the English statement that speculation online about employees who are Covid positive living in the dormitories of the Foxconn campus in Zhengzhou is “patently untrue.”
“Before new hires move in, the dormitory environment undergoes standard procedures for disinfection, and it is only after the premise passes government check, that the new employees are allowed to move in,” Foxconn said.
Searches for the term “Foxconn” on Chinese social media now yield few results, an indication of heavy censorship.
“Regarding violent behaviors, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” Foxconn said in a statement in Chinese.
The Zhengzhou facility is the world’s largest iPhone assembly site. It typically accounts for approximately 50% to 60% of Foxconn’s global iPhone assembly capacity, according to Mirko Woitzik, global director of intelligence solutions at Everstream, a provider of supply chain risk analytics.
Apple warned earlier this month of the disruption to its supply chain, saying that customers will feel an impact.
“We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated,” the tech giant said in a statement. “Customers will experience longer wait times to receive their new products.”
As of last week, the wait time for those models had reached 34 days in the United States, according to a report from UBS.
Public frustration has been mounting under China’s unrelenting zero-Covid policy, which continues to involve strict lockdowns and travel restrictions nearly three years into the pandemic.
Last week, that sentiment was on display as social media footage showed residents under lockdown in Guangzhou tearing down barriers meant to confine them to their homes and taking to the streets in defiance of strictly enforced local orders.
— Michelle Toh, Simone McCarthy, Wayne Chang, Juliana Liu, and Kathleen Magramo contributed to this report.
At least one person is dead and16 people are injured after a car drove through an Apple store in Hingham, Massachusetts, Plymouth County District Attorney Tim Cruz said in a news conference Monday.
Around 10:45 a.m. numerous 911 calls came in for help at Derby Street Shops, Cruz said. Hingham police and fire personnel responded shortly thereafter to find several people injured at the Apple store, Cruz added.
“A dark-colored SUV appears, went through at a rate of speed undetermined, through a … glass window and struck multiple people,” Cruz said.
Responding units found “multiple patients injured out in front of the store and in the store, including a few patients that were pinned against the wall by the vehicle,” Hingham Fire Chief Steve Murhpy said during a news conference Monday.
There were seven fire engines and 14 ambulances on scene to treat the injured victims, Murphy said. The chief was unable to provide updates on victims’ conditions. Authorities are not releasing the names of the injured victims at this time as they are working on notifying family members, Cruz added.
Kristen Perfetuo, a spokesperson for South Shore Hospital in Weymouth, Massachusetts, said the hospital is treating 17 patients from the crash, all of whom sustained “some kind of traumatic injury.” Perfetuo said multiple patients are in critical condition, with some undergoing surgery while others are being prepped for surgery.
Cruz said the investigation into the car crash is “active” and ongoing.
“Regarding the operator of the motor vehicle, we’re looking into that. Regarding the status of the motor vehicle, we’re looking into that,” Cruz said. The driver of the vehicle has not been taken to the hospital, according to Cruz.
“My understanding is he’s not been taken to the hospital as of yet,” Cruz said. “He is, right now, with police officers.”
When asked how many people were possibly inside the Apple store when the car crash occurred, Cruz noted that it is the beginning of a holiday week.
“Obviously the Apple store is a very busy place. It’s Monday of a holiday week,” Cruz said. “So therefore I don’t know exactly how many people were in there – I’m sure that we will find out.”
Hingham is about 20 miles south of Boston.
Apple’s Derby Street location in Hingham is currently closed, according to its website.
“We’re sorry for the inconvenience while this store is closed,” the website said. “Until we can reopen again, please consider using our online services.”
Apple released a statement Monday saying “our hearts go out to our team members and customers who were injured and all of those who were affected by this terrible incident.”
“We are devastated by the shocking events at Apple Derby Street today and the tragic loss of a professional who was onsite supporting recent construction at the store,” the company’s statement read. “We are doing everything we can to support our team members and customers at this very difficult time.”
The Apple store, which boasts a large glass storefront, is located in the back corner of the upscale Derby Street Shops. The entrance to the store faces a large parking lot that hundreds of visitors drive through daily.
The shopping area is especially busy during the holiday season, with the Apple store and the surrounding restaurants and shops garnering large crowds this time of year.
If you haven’t ordered one of the higher-end iPhone 14 models by now, it may be harder than usual to get one before the holidays.
The wait time for the 14 Pro and 14 Pro Max in the United States is now 34 days, up from seven days last week and 19 days as of three weeks ago, according to a new report from UBS, which tracked iPhone availability in 30 countries.
In a series of checks conducted on Apple.com by CNN for several cities, including New York, Los Angeles, Washington DC, Chicago and Miami, most iPhone 14 Pro and iPhone 14 Pro Max models in varying storage and color options had delivery dates of December 28 or later. The iPhone 14 Pro and 14 Pro Max were also unavailable for pickup in most locations.
The wait times, which a UBS analyst called “extreme,” come as Apple
(AAPL) confronts supply chain constraints and increased Covid-19 restrictions at its main assembly facility in Zhengzhou, China, which the company previously said is operating at a significantly reduced capacity.
Earlier this month, Apple released a statement that noted it is experiencing “strong demand” for iPhone 14 Pro and iPhone 14 Pro Max models but it expects lower shipments than anticipated. “Customers will experience longer wait times to receive their new products,” the company said.
Apple told CNN on Thursday that Apple Stores get regular shipments and customers can continue to check for in-store pickup options at their local retail location. The company also sometimes ships products ahead of the stated delivery date, and it’s possible some retailers and wireless carriers have more in stock than Apple.
While it’s unclear whether the higher-end iPhone 14 models will be available in time, the iPhone 14 and iPhone 14 Max showed availability in many locations for same-day pickup in CNN’s test on Thursday. UBS said it initially expected consumers to purchase a lower-priced iPhone 14 instead of an iPhone 14 Pro model, but the wait times did not increase for the less expensive devices last week.
Apart from being a potential headache for consumers, the uncertainty around iPhone availability could add to Apple’s challenges for the all-important holiday quarter. Apple CFO Luca Maestri previously said the company expects year-over-year revenue growth to decelerate in the December quarter compared to the prior quarter, citing the strength of the US dollar and ongoing macroeconomic weakness.
Apple released its new smartphone lineup in September, including the larger 6.7-inch iPhone 14 Plus model and an updated iPhone 14 Pro that rethinks the much-maligned notch. In typical Apple fashion, the devices also offer better battery life and camera features than the year prior.
The iPhone 14 and 14 Plus start at $799 and $899, respectively, while the iPhone 14 Pro starts at $999 and the Pro Max starts at $1099.
When Apple announced at its closely-watched September product launch event that it would soon introduce an Emergency SOS feature powered by a network of satellites orbiting above Earth, Brooklyn probably wasn’t the secluded location most had in mind for using it.
But on a rainy afternoon last week, I found myself trying to stay connected to one of the satellites from Prospect Park as part of a demo of the upcoming feature. I stepped out from under a giant oak tree andthe rain started to come down harder. Then I moved my device slightly to the right and quickly regained access to the signal and continued messaging with an emergency dispatcher.
The rain wasn’t the issue; it was the foliage limiting my phone’sview of the sky.
On Tuesday, Apple
(AAPL) will launch the Emergency SOS via Satellite feature for those with an iPhone 14 in the United States and Canada, with plans to roll it outin the UK, France, Germany and Ireland next month. The free feature promises to let iPhone users contact dedicated dispatchers in emergency situations via satellites when a cell phone network is unavailable.
Hikers, emergency responders and intrepid travelers may be well versed in the existing world of satellite phones, which provide voice, SMS, and data services anywhere on Earth. Now Apple is attempting to do the same with its iPhones, as part of a broader pitch this year to consumers that its devices don’t just help them live better, but also live safer. In the process, it could make its pricey products seem a bit more indispensable in an uncertain economic environment that has some rethinking expenses.
Apple recently invested $450 million in Globalstar, a global satellite service, and other providers to support the development of 24 low-orbit satellites flying 16,000 mph at a higher altitude than the International Space Station. The investment is part of Apple’s Advanced Manufacturing Fund, which has previously been used for glass production with Corning and laser technology for facial recognition.
During my test withan iPhone 14 provided by Apple, I attempted to call 911 but was automatically redirected to Emergency SOS via Satellite dispatchers for the purposes of the demo. When the device was unable to connect to cellular service, a small green icon appeared at the bottom right of the call screen to initiate a text conversation with emergency services.
I was prompted to fill out a questionnaire and tapped through a handful of short multiple choice questions; I noted I was lost but not injured. Nearly 20 seconds later, I received confirmation that my geo-location coordinates were sent to a dispatcher, along with my medical ID, emergency contact information and the answers to my questions. I was told to keep responses short, likely to cut down on the amount of data needed to transfer to the satellite and back down to a dispatcher. I was also asked to identify nearby landmarks and where I entered the park. My total exchange lasted about four minutes.
Apple said the size of messages was greatly condensed so the satellite can more efficiently route them to ground stations located all over the world. Once received, texts are sent to local emergency services or a relay center with Apple-trained emergency specialists who can send help.
But even in a city, I lost access to the satellite several times when I wasn’t in clear view of the sky. A grayscale circle with a green signal image showed upwhen connected but turned yellow when conditions were poor and red when connectivity was lost. I walkedabout 200 feet away from my original location to find a satellite. Once there,I held the device naturally in my hand; Apple said there’s no need to raise or wave it around.
When it works, the lifesaving potential for such a feature is obvious. But there aresome caveats. To start, it’s textonly; users will need to physically have the device in their hands to start an exchange, which may not always be possible if injured. The tool does, however, work with the iPhone 14 and Apple Watch’s crash detection feature, so it could automatically dial emergency services or send coordinates to a dispatcher when a user is unconscious or unable to reach their iPhone.
For now, Emergency SOS via satellite only works in English, Spanish, and French, although thedispatchershave professional interpretation services available for many more languages. Apple said it also may not work in all areas, such as in places above 62° latitude, including northern parts of Canada and Alaska.
For iPhone 14 users who want to see how the tool works, and test out the process for searching for a satellite, a demo is now available in Settings under “Emergency SOS via satellite.” Apple said the feature is available for free for two years and then it will reevaluate the offering based on what it’s learned about usage during that time.
Apple has limited the use of the AirDrop wireless file sharing function on devices in China, just weeks afterreportsthat some protesters had used the popular feature to spread messages critical of the Chinese government.
Users of iPhones in mainland China who updated their iOS software this week can send or receive files from non-contacts for only up to 10 minutes after manually selecting a new “Everyone for 10 minutes” option, according to tests performed by CNN’s Beijing bureau.
Users not in China face no such restriction and are able to receive files wirelessly from anyone, including people who are not contacts.
The change does not appear to affect iPhones in use in China that were purchased outside the country, according to the CNN team. Apple
(AAPL) told CNN Business the new feature will be expanded globally in the coming year.
The update comes just weeks after reports in international media, including The New York Times and Vice World News, that some residents in China were using AirDrop, which can be used only between Apple devices, to spread leaflets and images echoing slogans used in a rare protest against Chinese leader Xi Jinping on October 13.
On that day, shortly before Xi secured a precedent-breaking third term, two banners were hung on an overpass of a major thoroughfare in the northwest of Beijing, protesting against Xi’s zero-Covid policy and authoritarian rule.
And in 2019, AirDrop, which is effective only over short distances, was particularly popular among anti-government demonstrators in Hong Kong who regularly used the feature to drop colorful posters and artwork to subway passengers urging them to take part in protests.
Reaction in Chinese media to the software update was mixed. News website Sohu.com wrote that the feature was designed to address the specific problem of passengers on subways and buses receiving nuisance messages.
But others criticized Apple on Chinese social media. The US tech giant has been accused of appeasing the Chinese authorities before, including pulling business website Quartz’s app from its store in China over “content concerns” during the 2019 demonstrations in Hong Kong.
One of Apple’s largest suppliers is trying to strike a delicate balance in China.
Foxconn
(HNHPF) has to comply with some of the harshest Covid rules in the world whileensuring that Apple’s
(AAPL) shipments are not severely disrupted just before the key holiday season begins.
The Taiwanese company, which has been racing to control a Covid outbreak at its vast campus in the Chinese city of Zhengzhou, has started recruiting for the facility once again and is offering bonuses for staff who had recently left, according to a statement posted on one of the company’s WeChat accounts.
Foxconn’s statement came just a day after Apple said it expects iPhone 14 shipments to be hit by China’s Covid curbs, which have “significantly reduced capacity” at the Zhengzhou facility, the world’s biggest iPhone factory.
“The epidemic has disrupted our work and life, but… the company has achieved milestone results in the current epidemic prevention measures,” Foxconn said on its Zhengzhou recruitment WeChat account on Monday.
“The production and living order of the park has been restored to normal gradually,” the statement added.
Anxious workers had reportedly fled the locked-down facility. Videos of many people leaving Zhengzhou on foot have gone viral on Chinese social media in recent days. Foxconn is now stepping up measures to get its staff back.
If they return, staff who left between October 10 and November 5 will receive a one-off bonus of 500 yuan ($69), according to the company. New workers will be offered a salary of 30 yuan ($4) per hour, according to the post.
Last Wednesday, Chinese authorities imposed a seven-day lockdown onthe manufacturing zone that houses the Foxconn plant.
Workers will be able to start their work as soon as the “district-level lockdown is lifted,” Foxconn said in the WeChat post, at which point employees will be collected and driven to the factory for a closed-loop system — where staff will work and live on site.
The southern Chinese manufacturing hub of Guangzhou is the latest to see lockdowns amid a surge in COVID-19 cases, as the government presses ahead with the strict zero-COVID policy that has frustrated citizens.
The latest lockdowns have further disrupted global supply chains and sharply slowed growth in the world’s second-largest economy, as the Associated Press reported.
Residents in districts encompassing almost 5 million people have been ordered to stay home at least through Sunday, with one member of each family allowed out once a day to purchase necessities, local authorities said Wednesday.
The order came after the densely populated city of 13 million reported more than 2,500 new cases over the previous 24 hours.
China has retained its strict zero-COVID policy despite relatively low case numbers and no new deaths. The country’s borders remain largely closed, and internal travel and trade is complicated by ever-changing quarantine regulations.
Apple AAPL, -3.32%
and iPhone manufacturer Foxconn 2317, -1.95%
said over the weekend that restrictions are crimping production and will delay shipments of the high-end iPhone 14.
In the U.S., known cases of COVID are climbing again for the first time in a few months. The daily average for new cases stood at 39,578 on Tuesday, according to a New York Times tracker, up 5% versus two weeks ago.
As always, the increase in cases is not uniform across the nation. Some states are seeing sharp spikes, led by Nevada, where cases are up 96% from two weeks ago. Tennessee is second with cases up 69%, followed by Louisiana with cases up 68%, New Mexico, where they are up 62%, and Utah, where they have climbed 61%.
Cases are up by a double-digit percentage in 22 states.
The daily average for hospitalizations was up 3% to 27,713, while the daily average for deaths was down 14% to 308.
• Novavax Inc. NVAX, -5.19%
on Tuesday tweaked its full-year sales outlook to the low end of its expected range and reported a surprise quarterly loss, but sales for the COVID-19 vaccine maker were far better than expected. The company reported a net loss of $168.6 million, or $2.15 a share, compared with a loss of $322.4 million, or $4.31 a share, in the same quarter a year ago. Sales were $735 million, compared with $178.8 million in the prior-year quarter. Analysts polled by FactSet expected Novavax to earn $1.57 a share on revenue of $586 million.
• A Food and Drug Administration advisory committee said this week that Veru Inc.’s VERU, +3.95%
COVID treatment Sabizabulin demonstrated a clear clinical benefit with a favorable benefit-to-risk profile. Veru is seeking emergency-use authorization for treatment of hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome.
• A Massachusetts man who admitted to lying on his application for federal coronavirus business stimulus funds and using some of the $400,000 he received to pay his mortgage has been sentenced to 15 months in prison, federal prosecutors said, as the AP reported. In addition to the time behind bars, Adley Bernadin, 44, of Stoughton, was sentenced last week to three years of supervised release and ordered to forfeit more than $280,000, according to a statement from the U.S. attorney’s office.
The U.S. leads the world with 97.8 million cases and 1,072,943 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 227.3 million people living in the U.S., equal to 68.5% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 26.3 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 8.4% of the overall population.
The company is said to be training its voice assistant Siri to pick up on commands without needing the first half of the prompt phrase “Hey Siri.” The trigger phrase is used to launch Siri on various products, including the iPhone, iPad, HomePod and Apple Watch.
Bloomberg, which first reported the news, said the change could come next year or in 2024. Apple did not respond to a request for comment from CNN Business.
Although the update would be seemingly minor, experts say it may signal broader changes are coming and could require extensive artificial intelligence training. Lian Jye Su, a research director at ABI Research, said having two trigger words allows the system to more accurately recognize requests, so the move to one word would lean on a more advanced AI system.
“During the recognition phase, the system compares the voice command to the user-trained model,” Su said. “‘Siri’ is much shorter than ‘Hey Siri,’ giving the system potentially less comparison points and higher error rate in an echo-y, large room and noisy environments,” such as in the car or when wind is present.
The move would allow Apple to catch up to Amazon’s “Alexa” prompt that doesn’t require a first wake word for its voice assistant. Microsoft shifted away from “Hey Cortana” in 2018, now allowing users to only say “Cortana” on smart speakers. However, “OK Google” is still required for most Google product requests.
The move away from “Hey Siri” would also come at a time when Apple, Amazon and Google are collaborating on the Matter automation standard, which will allow automation and Internet of Things devices from different vendors to interoperate.
With this in mind, James Sanders, a principal analyst at market research firm CCS Insight, said “redoubling efforts on improving Siri functionality is likely a priority at Apple.”
Siri launched in February 2010 as a standalone iOS app in the Apple App Store before it was acquired by the tech giant two months later. The company then integrated Siri into the iPhone 4S, which was released the following year, and introduced the ability to say “Hey Siri” without physically touching a button in 2014.
Siri has gotten smarter over the years, thanks to integration with third-party developers, such as ride hailing and payment apps, and supporting follow-up questions, more languages and different accents. However, it still has issues with not understanding users and responding incorrectly.
“While the ‘Hey Siri’ change requires a considerable amount of work, it would be surprising if Apple announced only this change to Siri,” Sanders said. “Considering the rumored timing, I would anticipate this change to be bundled with other new or improved functionality for Siri, perhaps alongside a new model of HomePod and integrations with other smart home products via Matter, as a reintroduction to Apple’s voice assistant.”
