Three major Apple suppliers faced falling stock prices on the Nikkei Asia300 Index today, believed to be directly related to "concerns over demand for iPhone X." The three Taiwanese suppliers were Largan Precision, Hon Hai Precision Industry (Foxconn), and Taiwan Semiconductor Manufacturing Company, dropping 4.4 percent, 1 percent, and 3 percent on the index, respectively.
iPhone X demand concerns and decline in supplier stock prices came after the latest analyst report by JP Morgan yesterday, predicting "slashed" iPhone X orders in the first part of 2018. In a research note reported by CNBC, analyst Narci Chang said "high-end smartphones are clearly hitting a plateau this year," singling out Apple by forecasting that iPhone X manufacturing "might be down 50 percent quarter-over-quarter."
Reports of "weakened" iPhone X demand heading into 2018 began emerging late last year, mainly stemming from analyst belief that the high price of the device would eventually lead to reduced sales after early adopters got their iPhone X. These reports have caused several Apple suppliers to be anxious over low order visibility for the full range of iPhone 8, iPhone 8 Plus, and iPhone X models in Q1 2018. CLSA analyst Nicolas Baratte argued that the reported reduction of the iPhone X's Q1 2018 shipment forecast from 50 million units down to 30 million units "remains inflated."
Despite multiple stories about the iPhone X's plateaued demand in early 2018, the smartphone is believed to have sold well following its fall launch in 2017 and throughout the holiday season. Research data shared just yesterday by Canalys reported that Apple shipped 29 million iPhone X units in Q4 2017, making the device the "world's best-shipping smartphone model over the holidays."
Earlier in January, Kantar Worldpanel said that the iPhone X saw "stellar" performance in several countries during November of last year, though it was outsold by the iPhone 8 and the iPhone 8 Plus in the United States. Combined, Apple's three new iPhones captured the top spots for best-selling smartphone models during the month. Kantar's global OS data pointed towards "staggering" demand for the iPhone X in China from users said to be switching sides from rival smartphone makers.
We should get a better view of how the iPhone X sold soon, when Apple reveals its earnings results for the first fiscal quarter of 2018 on Thursday, February 1.
Top Rated Comments
Where does Apple go after $1200? What's next? $1500? Where does it end?
Any company with a lot of cash and a lot of marketing strength would deal with a massive sales downturn by cranking up the marketing. It would be obvious. If we want to think this is about price, Apple Marketing could incentivize partners to push units for as little as free with payment plan spin.
Again, I'm not defending Apple here, or defending the X, or defending the price of the X. I'm just offering counterpoint to the "Apple is doomed" concept based on these particular reports. There are many other possibilities. How many times have we seen such rumors before and then Apple reports "best quarter ever" and so on?
Is it plausible that sales could be down on the X, due to price, due to the notch and on? Sure, it IS plausible. But is it plausible that sales are actually up too? Sure, that's plausible too. I stand by the suggestion that if sales were dramatically down, marketing efforts to move more units would be dramatically and obviously up. I'm not seeing it here in America, one of the most important markets in the world. I have not heard anyone in other major markets- such as China- comment that Apple is marketing way over and above there, nor that Apple is doing unprecedented promotional things there, etc. Could it be happening? Maybe- I just haven't seen or heard anything like that.
So I put myself in Apple's shoes. If sales of my most important product are significantly down, do I just roll with that and hope to correct it next Fall with new models? I have- as is so often slung around here- "2XX Billion in the bank" and award-winning, spectacular marketing at my disposal. Do I just do nothing more than usual and plan to shock the world with 3+ terrible quarters?
If I do that, I'm probably getting fired. Shareholders don't like significant & dramatic negative surprises with no obvious efforts to do anything about them. Board members don't like angry shareholders. Heads will roll. Since it would be my head, I want to take new, significant actions so I can buy myself more time (with head attached) for new efforts to try to fix the problem.
I'm not seeing that. And Apple would do it. I'm not hearing about it in China, etc. And Apple would do it.
I accept that sales could be down. I don't accept that Apple would do nothing special if that was the case. Thus, I speculate that sales are not dramatically down... in spite of this kind of rumor... which, in various forms, we've all seen about 50 times before Apple reports another incredible quarter.
The party will not go on forever. But the tangible evidence of inaction implies it's not going to be a "party's over" message this time. Question my logic here if you wish, but do take a good look at your own too: some analyst report (we always take analyst reports as gospel right)? JP Morgan no less- a big Wall Street bank that has a pristine history of telling only the whole truth and nothing but the truth, right? Please do a search for JP Morgan and Legal Settlements. Try this for starters ('https://www.thedailybeast.com/jp-morgan-chases-long-list-of-expensive-legal-settlements-grows-even-longer'). Some suppliers are getting less orders than expected? Apple- the supply chain master of masters- can't tap other suppliers? Other products like the non iPhone X phone might not be selling MORE than expected?
Put yourself in Apple's shoes. What would you do if sales were dramatically down? Nothing?