Analysts have gone back and forth on the issue of the iPhone 8 launch date delay, but now we have a new tidbit to enter into evidence. Apple supplier Broadcom had some commentary pertaining to the issue of the rumored iPhone 8 launch date delay, and it just so happens that several analysts wrote about it in their coverage of the company’s earnings report.
Both sides split on the case of the iPhone 8 launch date delay
Generally, there is just a whole lot of confusion about the potential for an iPhone 8 launch date delay. Analysts who are “voting” either for or against a delay don’t even agree with each other, causing a rift in both camps and confusing anyone who’s trying to follow this bit of Apple news. Many say that the tenth anniversary model with an OLED display will indeed be delayed, with some saying that it will be released just in time for Christmas and one or two even saying it will be pushed into next year.
On the other hand, about an equal number of analysts say that the iPhone 8 won’t be delayed and will be released at the same time as the iPhone 7s and 7s Plus. This camp is also split, however, as some analysts are warning that the initial launch volume will be extremely low—so low, in fact, that it’s worth questioning whether Apple would even make the iPhone 8 available on time.
After all, if launch volumes are miniscule, Apple fans might riot in the streets (We say that jokingly… mostly).
Clues from Broadcom’s guidance
Apple supplier Broadcom released its latest set of earnings results last night, and analysts from at least two firms feel that the results signal that there is indeed going to be a delay in the release of the iPhone 8.
Even before the company’s earnings report, analysts have been watching the company for clues about the iPhone 8. The number of chips for this year’s models is rising to eight from five in the iPhone 7, meaning that Broadcom will benefit greatly but also that the company can offer clues as far as timing for the next iPhone models.
KeyBanc analyst John Vinh said before the earnings release that he expects the three new chips to be for wireless charging, RF and Force Touch. He also said in his preview of that release that the consensus estimate of $4.8 billion in revenues for the October quarter looked conservative because it only implied 20% growth in wireless revenues.
“With the ramp of new iPhones in 2H17 expected to grow 10% y/y and content growing 40%, we see an upward bias to forward guidance,” Vinh wrote.
On Thursday, Broadcom guided for its Wireless segment to be flat sequentially in the January quarter, when it’s usually down in the low- to mid-teens quarter over quarter. The company’s October quarter guidance was only slightly higher than the consensus, at $4.8 billion, versus the consensus of $4.79 billion. The general idea is that one would think that the company would guide more aggressively for the October quarter if the iPhone 8 were launching on time.
Vinh did not mention the potential for an iPhone 8 launch date delay, but he couldn’t have been the only one expecting upside to October guidance based on the iPhone 8 launch being on time.
Broadcom management talked about iPhone 8 production
In his report today, Oppenheimer analyst Rick Schafer pointed to commentary from Broadcom management about the iPhone 8 launch date delay. He wrote in his coverage of the supplier’s earnings that the company’s revenue guide for the October quarter of $4.8 billion “was in line with elevated expectations, we believe largely on a slower than typical ramp of the annual iPhone refresh.”
“Management indicated iPhone production is now in full swing, and the delay will drive better than usual FQ1 (Jan.) seasonality,” Schafer wrote.
He also noted that Broadcom’s Wireless revenues grew 27% year over year in the July quarter, “despite a later than typical iPhone build-cycle. Management expects ~40% gen/gen iP8 content increase, on top of ~30% iP7 bump.”
Recently, analysts from other firms noted that iPhone demand appears to still be strong as consumers aren’t pausing their iPhone purchases before the release of the iPhone 8. This could be one reason why Broadcom recorded such strong growth in its July quarter.
Other analysts point to evidence of iPhone 8 launch date delay
Macquarie analyst Srini Pajjuri agrees with the assessment about a delay, and he titled his post-earnings report on Broadcom “iPhone delay mutes near-term upside.” He said the supplier’s fiscal fourth quarter was somewhat disappointing because of delays in the “high-end iPhone” model. Further, he noted that the company’s management expects their fiscal first quarter to be better than typical seasonality.
Pajjuri explained that the iPhone 8 launch date delay will push some of Broadcom’s volumes back into the first quarter. He expects the tailwinds from the iPhone 7s and iPhone X, also referred to as the iPhone 8, to last “well into 1H18.”
Deutsche Bank analyst Ross Seymore also called attention to the in-line guidance for the October quarter, noting that some investors may be disappointed by that because the quarter should be benefiting from the iPhone production ramp. While he didn’t weigh in on a delayed iPhone 8 launch date, the decline in Broadcom shares on Friday shows that investors were indeed disappointed.