uploads///A_Semiconductors_AAPL_iPhone X adoption in first week

Is Apple Seeing Demand for 2017 iPhone Models?


Dec. 14 2017, Updated 12:51 p.m. ET

Early adoption of the 2017 iPhone models

Previously in this series, we saw that Apple (AAPL) and its suppliers have reacted to the slightest hint of iPhone X demand, which appears to be strong. Apple shipped its first iPhone X in November 2017.

According to Localytics, the iPhone X achieved 0.93% of the total iPhone user share in the first weekend of its launch.

The chart above shows that the iPhone 8 and 8 Plus had lower adoption by consumers, as they were waiting for the iPhone X. Although Apple launched its iPhone X for $999, this price point didn’t hinder its adoption. Industry analysts expect total iPhone X demand to reach 50 million devices.

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What the iPhone X success means to Apple

Many Apple investors are betting on high demand for the iPhone X to boost the company’s revenues. The success of the iPhone X is critical for Apple as its iPhone 7 and 7 Plus models saw the company report its first year-over-year decline in iPhone shipments in 2016. This pressured Apple stock, as it fell below $100.

Industry observers had stated that the iPhone phenomenon could be fading as competition from Chinese (MCHI) handset makers increases and smartphones prices fall. Amid this pessimism, Apple announced a higher price for its iPhone X, which created doubts among some analysts that the price factor would impact the adoption of the phone.

Demand for 2017 iPhone models

The early demand for iPhone X looks strong. As reported by US News & World Report, KeyBanc surveyed carriers and found that inventory of the iPhone 8 model has increased while the iPhone X models have sold out. KeyBanc analyst John Vinh stated that the inventory for iPhone 8 crossed two days, which is higher given the strong demand for the device.

On the other hand, iPhone X shipments are inconsistent, with many stores receiving only five to ten devices per shipment. Given the strong demand for this device, the iPhone X inventory is being sold immediately.

Constrained iPhone X supply impacts suppliers

The constrained supply of the iPhone X is making it difficult to assess the true demand for the device. This creates uncertainty for Apple suppliers, who are reacting to any news on the iPhone X. These supply constraints during the key holiday season are limiting the growth of Apple’s suppliers.

Vinh stated, “We expect supply chain stocks to remain range bound until we can better assess true demand for the iPhone X.” This view explains the last one-month downtrend in Qorvo (QRVO), Cirrus Logic (CRUS), and Skyworks Solutions (SWKS).

Next, we’ll look at the supply issues with the iPhone X and how Apple plans to resolve them.


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