Demand for new iPhones is slowing down, analyst says

Nov 8, 2018 09:50 GMT  ·  By  ·  Comment  · 
Apple's 2018 iPhone XR
   Apple's 2018 iPhone XR

Apple has recently announced that it would no longer share iPhone sales numbers during its earnings reports, and while this decision makes sense at first glance, it looks like it’s all happening for a good reason.

Analysts believe iPhones may have reached their saturation point and the only way they can go now is down. And unfortunately for the Cupertino-based tech giant, the latest reports on the iPhone front seem to suggest the decline has already started.

Specifically, information that made the rounds earlier this week suggested that Apple no longer wants to expand iPhone XR production at Foxconn and Pegatron plants due to sales that are lower than anticipated. People familiar with the matter indicated Foxconn might produce 100,000 fewer units that Apple estimated it would need to reach iPhone XR demand.

Further production cuts?

But as it turns out, it’s getting worse. In a note to clients, Rosenblatt Securities' Jun Zhang says another production cut hitting the iPhone XR may be the only way to go due to component problems mixed with the slower sales mentioned above.

The analyst says quality issues experienced by a number of suppliers, like Skyworks, may also be to blame for fewer iPhone XR units being produced these days. Zhang notes this is an unusual timing for production cuts given the holiday season is just around the corner, but on the other hand, it’s an indication Apple handles the inventory more cautiously following slow sales.

“We believe this potential round of iPhone XR production cuts by Apple may be attributable to the recently found PA quality issues,” the analyst explained.

Earlier this year, it was anticipated that iPhone XR would be the best-selling 2018 iPhone, but for now, it looks like iPhone XS and iPhone XS Max are selling at least as good as the more affordable model. Furthermore, iPhone 8 continues to be a successful product, and its lower price substantially reduces the ASP for Apple products in the second half of the year.

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