iPhone 7 Euphoria Over, Demand Set To Decline: Analyst

iPhone 7Image Credit: Apple Inc. (Screenshot)

The Jet Black version of iPhone 7 and 7 Plus is still out of stock in many countries, but KGI Securities analyst Ming-Chi Kuo believes that the iPhone 7 euphoria is waning. In a research note to investors (via Apple Insider), Kuo said the availability of the 4.7-inch iPhone 7 has improved in most parts of the world over the last few weeks. The 4.7-inch version accounts for a huge chunk of the iPhone sales.

iPhone 7 component shipments to decline by 5% to 15%

Kuo predicts that the iPhone sales will see a significant decline through November and December. KGI Securities says the iPhone suppliers could revise down their supply forecasts by 5% to 15% for the last two months of 2016. Kuo’s prediction is based on improved stock availability of new iPhones and reduced shipments seen in the supply chain.

Ming-Chi Kuo said he had already factored in the falling supply chain orders to his iPhone sales estimate of 70-75 million units in November and December. For the fourth quarter of 2016, the analyst lowered his overall iPhone component shipment estimate from 85-90 million units to 80-85 million units. The analyst has also slashed his shipment forecasts for iPhone 7 components in 2016 from 95-100 million units to 90-95 million units.

Kuo pessimistic about iPhone 7 sales in China

KGI Securities’ forecasts contradict reports from Asian component suppliers, who claimed to have seen an increase in iPhone component orders near the end of September. Kuo says lukewarm demand is mainly due to a “lack of spec surprises” in the 4.7-inch iPhone 7. The Plus version had seen greater demand due to dual-camera system, but supply shortage of the 5.5-inch model has ended as the device is now in stock in most places.

The analyst held a more negative view about iPhone sales in China. In the run-up to the Chinese new year, there has been greater inventory buildup. But Apple is unlikely to expand its market share going into 2017 due to fierce competition from Chinese brands like Huawei, Xiaomi, Oppo, and OnePlus. The Chinese government has also warned that the iPhone sales could nosedive if President-elect Donald Trump imposes import tariffs on Chinese goods.

Apple won’t launch successor to iPhone SE

Kuo had previously said that the recall and subsequent discontinuation of Samsung’s Galaxy Note 7 would help the iPhone 7 and 7 Plus attract 5-7 million additional customers. During Apple’s latest earnings conference, Tim Cook said the company had grossly underestimated demand for the 5.5-inch model. The Apple CEO added that he was not sure whether the company would be able to meet all the demand through the end of the year.

Kuo said in another research note earlier this month that Apple might not launch a successor to the surprise hit iPhone SE. The move is aimed at keeping the gross margins high, and avoiding the cannibalization of the high-end devices.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com or on Twitter @VikShukla10

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