From a note to clients by Rosenblatt analyst Jun Zhang that landed in my inbox Friday:
Based on our most current research we believe that AAPL may be planning to cut iPhone X production for the June quarter by as much as 10 million units reducing output to 15 million. This move drives our latest view that Apple could be planning to stop iPhone X production midyear to ramp up for the various models of the coming Xs.
Much of the published industry speculation drives our current thinking which points to three models as follows:
- A new 5.8 “ iPhone Xs (OLED) that would completely replace the current iPhone X with a potentially lower selling price($799-$999).
- A 6.5” iPhone X Plus that could be sold at the same price as the current iPhone X which ranges from $999-1,299
- An LCD version of iPhone X with 6.1” screen that could be priced at $650 to address middle market demand
Based on this view, we believe that iPhone X cuts could be partially driven by the shorter life cycle of the phone. Based on history, we believe Apple does not want to hold inventory of iPhone X before the new Xs launches. That is why we look at the iPhone X cuts differently from the cuts on the other models.
Maintains Buy rating and $180 price target.
My take: Yesterday Zhang—one of the better supply chain watchers—was calling BS on reports of of sharp cuts in iPhone X production in the March quarter. Now for the June quarter he’s contemplating the sharpest cut of all. Go figure.
UPDATE: KGI’s Ming-Chi Kuo too is speculating that Apple may phase out the current iPhone X this summer. He adds his observation that demand for the phone seems weak. Excerpted from 9to5Mac:
A new report from KGI defies market consensus claiming that iPhone X shipments are not as strong as many believe. The analyst says that it believes Apple will ship around 18 million iPhone X units in the current quarter, significantly below estimates in the 20-30 million range from other analysts. It primarily blames longer replacement cycles in China for the weaker demand for iPhone X.
However, KGI reaffirms its predictions of a three tier 2018 iPhone lineup with a 6.1-inch LCD model, a successor to iPhone X and a 6.5-inch OLED ‘iPhone X Plus’ launching in the fall. In fact, KGI suggests that Apple may stop making iPhone X altogether when production of the new 2018 models ramp up.