Apple faces a number of problems in 2023, according to analyst

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Apple faces a number of problems in 2023, according to analyst

According to an Apple bull on the Street, Apple AAPL could have a number of other problems on its hands in 2023, besides an uncertain manufacturing situation in China.

The replacement cycle strength may weaken into '23 due to two factors, which is why I think there are two main issues ahead of Apple for 2023, according to analyst Martin Yang, on Yahoo Finance Live video above Number one. One is that the majority of the installed base is likely to be upgraded, and continuing macroeconomic pressure will cause certain groups of consumers to delay their upgrade. There are ongoing pressures on Apple's software revenues. Apple's stock is under pressure due to the COVID situation out of a key manufacturing hub in China.

China's COVID 19 cases are at record highs just as the country was moving away from its zero-COVID policy. Violent protests erupted last week at the flagship plant of the iPhone maker Foxconn, and have intensified across the country in the past few days.

EvercoreISI analyst Amit Daryanani wrote a note on Tuesday that Apple is struggling to cope with a combination of shutdowns and worker protests at a key production facility in Zhengzhou, China. Since then the situation in Zhengzhou seems to have improved but not back to normal. We think the site has been operating at 60 - 70% utilization for almost a month. In order to reflect the continued headwinds we have adjusted our quarterly estimates lower as iPhone demand could get affected by 5 -- 8 million units mostly at high-end and negatively affect revenues by $5 -- 8 billion in the current quarter, which ends after December. Daryanani isn't alone in his concern over Apple's bottom line because of China.

It has been a gut punch at the worst time possible for Apple, says Dan Ives, Wedbush Managing Director on Yahoo Finance Live. We're talking about the shortages in Apple stores of more than 30% of their iPhones in the US, according to the iPhone 14. Ives estimated that Apple has significant iPhone shortages that could wipe off 5% to 10% of units in the current quarter.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Sozzi follows BrianSozzi on Twitter and LinkedIn.