iPhone Demand Remains High Despite Technology Market Slowdown, Say Analysts

iPhone demand this quarter has thus far remained "surprisingly resilient" despite the widespread supply chain issues and other factors affecting the tech industry, according to Wedbush analysts Daniel Ives and John Katsingris.

Apple iPhone 13 colors lineup 2022
Summing up their research findings in a new investor note, the market analysts said Apple's flagship devices had been holding up well despite "compression across the board in tech" and fears of a growth slowdown rising, as reflected in Apple's reduced share price.

The albatross for the June quarter in our investor conversations over the past month have naturally been the Covid lockdowns in China which will negatively impact revenue by between $4 billion and $8 billion as a headwind according to Cook & Co.'s guidance given last month.

As of now we believe iPhone demand is holding up better than expected (despite the various supply issues that have plagued Apple and the rest of the tech sector) and are trending better than management's guidance thus far in the quarter.

Apple last month said that lockdown disruptions in China and silicon shortages would continue to make it difficult to make enough product to satisfy strong consumer demand as the year progresses, and that this would ultimately affect Apple's June quarter revenue.

Wedbush said lockdowns and supply chain issues should be "peak worry" in the June quarter, but that then they would subside into the key September and December quarters on the heels of Apple's iPhone 14 launch.

We believe the initial bogey and production plans for iPhone 14 should be up modestly from iPhone 13 out of the gates which speaks to Apple's confidence that pent up demand for this next release remain healthy despite the jittery macro.

Wedbush analysts claim the stickiness of Apple's upgrade cycle is being underestimated by investors and Apple's installed user base will be key to ‌iPhone 14‌ sales this year, with almost a quarter of the 1 billion iPhones in general circulation having not been upgraded for roughly 3.5 years.

On top of this advantage Apple holds over rivals, Wedbush expects Apple's services business to account for roughly $80 billion of annual revenue this year and is set to grow at a "steady double- digit clip" into 2023. "We believe Apple's services business is worth alone north of $1 trillion which coupled with the flagship hardware business makes the risk/reward very compelling at current levels," said the analysts.

Tag: Wedbush

Top Rated Comments

Aluminum213 Avatar
6 weeks ago
My self esteem is low and I badly need that new iPhone 14 Pro
Score: 6 Votes (Like | Disagree)
Relentless Power Avatar
6 weeks ago
Well, what we do know is, the average consumer won’t likely prioritize purchasing a ‘new’ iPhone with inflation the way it is currently with the economy average I believe at ~8.4%.

I suspect the last thing consumers will do, is spend their money on superfluous tech they don’t need, which means they will retain their current smart phone for a longer duration, especially if said person is making payments on it.
Score: 4 Votes (Like | Disagree)
Abazigal Avatar
6 weeks ago
That's one of the upsides of Apple products offering that unique experience. If a particular product isn't in stock, chances are the consumer will simply wait for supply to eventually catch up, rather than opt for an alternative offering. Eg: people are willing to wait months for their M1 MBP to ship rather than buy a windows laptop that's currently available.

So it just means deferred sales, not lost sales.
Score: 3 Votes (Like | Disagree)
DelayedGratificationGene Avatar
6 weeks ago

Well, what we do know is, the average consumer won’t likely prioritize purchasing a ‘new’ iPhone with inflation the way it is currently with the economy average I believe at ~8.4%.

I suspect the last thing consumers will do, is spend their money on superfluous tech they don’t need, which means they will retain their current smart phone for a longer duration, especially if said person is making payments on it.
The carriers now are so desperate on keeping you that they give you a free iPhone for your old iPhone every year. Same thing with iPhone 14 etc…so there’s no question about upgrades anymore.
Score: 1 Votes (Like | Disagree)
svish Avatar
6 weeks ago
Demand will always be there for an iPhone!! iPhone always sells.
Score: 1 Votes (Like | Disagree)
Relentless Power Avatar
6 weeks ago

The carriers now are so desperate on keeping you that they give you a free iPhone for your old iPhone every year.
Which carriers are giving ‘free’ iPhones every year? And if so, which iPhone model are you inferring that’s free?

I’m not buying into the ‘desperation’ part of your post. There’s no loyalty to a carrier from a consumer standpoint (With the exception the device needs to be fully paid) or vice-versa, when they recruit new customers all the time. However, they have some really lucrative promotions ‘mid-cycle’, like “$800 for trade-in” on certain models was a recent promotion through Verizon.
Score: 1 Votes (Like | Disagree)

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