According to analysts, iPhone demand this quarter has been “quite resilient” despite broad supply chain difficulties and other concerns hurting the tech industry.
In a recent investor note, market analysts summarized their study results, saying Apple’s flagship gadgets had held up well despite “compression across the board in tech” and mounting worries of a growth slowdown, as reflected in Apple’s lower share price.
Add to that TSMC Chairman Mark Liu’s statements this week that the chip supplier is experiencing weaker demand for consumer electronics such as “smartphones, PCs, and TVs, especially in China, the world’s biggest consumer market,” and it seems Apple may be in for a major issue.
Liu was addressing on behalf of the Taiwan Semiconductor Industry Association. He did, however, address TSMC’s prospects directly, stating that the firm will most likely not change its growth plans or expenditures this year since it expected automotive and high-performance computer demand to compensate for the fall in consumer items. Nikkei Asia earlier claimed that an unknown supplier told Apple that it expected to reduce iPhone SE production orders by 20% next quarter and AirPod purchases by 10% in 2022.
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 reduced the trade-in value of an iPhone 12 Pro Max from $700 to $650, implying that the corporation does not need to persuade customers to trade in older iPhones for newer models. In addition, the business now provides a more appealing choice for customers who have postponed trading in their phones due to the exorbitant pricing of new models: the $429 iPhone SE.
Apple warned last month that shutdown interruptions in China and chip shortages would make it difficult to produce enough goods to meet high customer demand as the year progressed, affecting Apple’s June quarter sales.
It was also stated that lockdowns and supply chain concerns would be “peak anxiety” in the June quarter, but would subsequently drop in the important September and December periods following Apple’s iPhone 14 launch.
However, one issue that may have an impact on the imminent iPhone 14 launch is the continuous COVID-19 lockdowns at Chinese production sites. Plants have been disrupted by multiple lockdowns, but anticipates that things will be improved by the time the iPhone 14 is released as mentioned before.
According to the estimate, about a quarter of a billion iPhones have not been upgraded in approximately 3.5 years, making the iPhone 14 release significant — and one that might create massive demand based on historical upgrade cycles.
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