iPhone 6 Plus Experiences Severe Supply Constraints

iPhone 6 Plus Experiences Severe Supply Constraints
JESHOOTS / Pixabay

Apple Inc. NASDAQ:AAPL’s iPhone 6 and iPhone 6 Plus pre-orders have smashed all the records. More than four million customers placed advance orders for its new phones on the first day. In fact, Apple site was down for hours when advance bookings opened. The Cupertino company also announced its wearable device called Apple Watch.

Apple’s new devices will be extremely popular in China

Cantor Fitzgerald analysts Brian J. White and Isabel Zhu believe this is a “powerful product cycle.” Helped by the new Watch and continued ramp with China Mobile, the current product cycle extends beyond a couple of quarters. It won’t be restricted to just the holiday season. Cantor Fitzgerald has a Buy rating on Apple stock with $123 price objective.

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The research firm said Apple stock still trades at 11.4x CY2015 estimates, excluding cash. The delivery date for the 5.5-inch iPhone 6 Plus has been pushed to November, reflecting strong bookings and supply constraints. Cantor Fitzgerald expected the phablet iPhone 6 Plus to be “extremely popular” in China. Notably, the world’s most populous country was not included in the first round of the iPhone 6 launch, upsetting Apple’s Chinese fans. In the past few years, China has become Apple’s second biggest  market after the United States.

Apple’s iPhone 6 Plus facing supply constraints

Brian White says the research firm’s Apple Barometer indicated that the supply chain began ramping up production of the new iPhone models a little late in July. Meanwhile, rumors in the months of July and August also suggested that the phablet version was facing manufacturing difficulties. Apple’s suppliers are expected to manufacture as much as 80 million units of the new iPhones by the end of this year.

Apple’s late entry into phablet category has given its biggest rival Samsung an opportunity to take potshots at the iPhone 6. Over the past few days, the Korean electronics giant has released a number of video ads aimed at Apple’s new products. In one ad, Samsung said Apple was “imitating” its Galaxy Note line.

Apple shares fell 1.39% to $100.19 in pre-market trading Tuesday.

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