KGI Securities analyst Ming-Chi Kuo is out with a new report saying the reported TrueDepth Camera production issues won’t be “significantly addressed” before the end of the year. But once issues are solved, iPhone X shipments will “pick up strongly” in the first half of 2018.
For months, many Wall Street analysts have predicted the iPhone X will drive a significant number of existing iPhone users to upgrade. According to comScore MobiLens, at the end of 2016 nearly 50M people in the US owned iPhone 6 devices and about 22M owned an iPhone 5s or older. That’s more than 70 million customers who are ripe for an upgrade cycle when the flagship iPhone X launches
However, the 2018 iPhones will see a “longer sales period” than the 2017 iPhone X because of the improvements in availability as Apple perfects the production process. This implies that Kuo sees the 2018 iPhone X models being readily available right at launch, as opposed to the significant delays plaguing the current generation.
All in all, Kuo predicts 210 million to 220 million iPhone sales in 2017, while 2018 will see Apple ship between 245 million to 255 million units. As for iPhone 8, Kuo said the handset sales in the Christmas quarter will be better than expected, but still cannibalized by iPhone X shipments in November. In the meantime, iPhone 8 Plus sales have been “better than expected” thus far.
Finally, Kuo estimated that once iPhone X's production issues are solved in the fourth quarter of this year, shipments will "pick up strongly" in the first half of 2018. The analyst has vocalized iPhone X production concerns several times in the past and today’s report does much of the same. He lowered his iPhone X predictionss to 40 million units with Apple making under 10k units per day.
However, the 2018 iPhones will see a “longer sales period” than the 2017 iPhone X because of the improvements in availability as Apple perfects the production process. This implies that Kuo sees the 2018 iPhone X models being readily available right at launch, as opposed to the significant delays plaguing the current generation.
All in all, Kuo predicts 210 million to 220 million iPhone sales in 2017, while 2018 will see Apple ship between 245 million to 255 million units. As for iPhone 8, Kuo said the handset sales in the Christmas quarter will be better than expected, but still cannibalized by iPhone X shipments in November. In the meantime, iPhone 8 Plus sales have been “better than expected” thus far.
The market generally refers to 2017 as the super cycle of the iPhone, but we think the real super cycle will be in 2018 for the following reasons: (1) TrueDepth Camera's production issues will be significantly addressed in 2018F; (2) new models launched in 2018F will enjoy a longer sales period than those unveiled in 2017; and (3) the product mix, specifications and designs of new iPhone models from 2018F will be more competitive. We estimate that for 2017, iPhone shipments will come in at 210-220mn units, which should grow to be 245-255mn units in 2018.
Finally, Kuo estimated that once iPhone X's production issues are solved in the fourth quarter of this year, shipments will "pick up strongly" in the first half of 2018. The analyst has vocalized iPhone X production concerns several times in the past and today’s report does much of the same. He lowered his iPhone X predictionss to 40 million units with Apple making under 10k units per day.
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