Analysts Cut iPhone X Shipment Forecasts, Citing Lukewarm Demand
Analysts Cut iPhone X Shipment Forecasts, Citing Lukewarm
Demand
High price and few innovations dimming buyer interest, JL
says
Asian Apple supplier shares fell on iPhone X order cut
reports
December 25, 2017, 12:27 AM PST Updated on December 25,
2017, 8:08 PM PST
Analysts have lowered iPhone X shipment projections for
the first quarter of next year, citing signs of lackluster demand at the end of
the holiday shopping season.
Sinolink Securities Co. analyst Zhang Bin said in a
report Monday that handset shipments in the period may be as low as 35 million,
or 10 million less than he previously estimated. "After the first wave of
demand has been fulfilled, the market now worries that the high price of the
iPhone X may weaken demand in the first quarter," Zhang wrote.
JL Warren Capital LLC said shipments will drop to 25
million units in the first quarter of 2018 from 30 million units in the fourth
quarter, citing reduced orders at some Apple suppliers. The drop reflects “weak
demand because of the iPhone X’s high price point and a lack of interesting
innovations,” the New York-based research firm said in note to clients Friday.
"Bad news here is that highly publicized and
promoted X did not boost the global demand for iPhone X," according to the
note.
Apple has been counting on a redesigned 10th anniversary
iPhone to boost shipments as its market value advances toward $1 trillion. The
Cupertino, California-based company is facing new challenges from Samsung
Electronics Co., which is quickly recovering from the Galaxy Note 7’s recall
after fires. In the meantime, Chinese brands such as Huawei, Oppo and Xiaomi
are also luring away potential customers in China and other emerging markets
such as India.
Taiwan Report
Apple is said to have trimmed its first-quarter sales
forecast to 30 million units from 50 million, Taiwanese newspaper Economic
Daily News reported, citing unidentified supply chain officials. It also said
Hon Hai Precision Industry Co.’s main iPhone X manufacturing hub in Zhengzhou,
China, stopped recruiting workers. The company also known as Foxconn is the
sole iPhone X assembler, and also makes the handsets in Shenzhen and Chengdu.
Shares of Asian suppliers, such as Lens Technology Co.,
Shenzhen Desay Battery Technology Co. and Largan Precision Co. fell Monday on
the report. Lens recovered some of the losses on Tuesday, while Largan
continued to slide. Shenzhen Desay was little changed.
Hon Hai shares slid for a second day Tuesday, on track
for the lowest close since March. Touch screen maker General Interface Solution
Holding Ltd. plunged 8.4 percent Tuesday after slipping slightly Monday.
An Apple representative declined to comment on production
arrangements. Foxconn said in an emailed statement that company policy prevents
it from commenting on such matters.
Apple received a rare downgrade last week from Nomura
Instinet analyst Jeffrey Kvaal, who said iPhone X sales as well as other
positive factors are already baked into the stock price. He lowered his rating
to "neutral" from "buy."
The stock has soared 51 percent this year, bringing its
market value to almost $900 billion.
Supply, Demand
Apple’s efforts to increase iPhone X production in recent
months have made supply and demand fairly balanced at the moment, said Jia Mo,
an analyst at Canalys in Shanghai.
"The market will still hold high expectations for
Apple’s 2018 products if Apple introduces more devices with iPhone X’s key
features to cover a wider price range," he said.
Customers seem to be opting for cheaper models of the
iPhone, according to Cowen & Co., which says that suggests Apple failed to
cram enough new technology into the iPhone X to justify a $999 price tag.
New features such as facial recognition and virtual
reality herald Apple’s vision for future smartphones, but other issues such as
the lack of augmented-reality apps have cooled buyer interest in those technologies.
— With assistance by Yuan Gao
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