Analyst's 'iPhone X is dead' memo hyperbolic, loaded with questionable claims
An analyst is arguing that Apple will completely discontinue the iPhone X this year, owing to a lack of consumer interest at the high-end. That's a highly questionable claim, even if one assumes demand isn't as strong as Apple expected.
Oversupply at Apple processor maker TSMC -- which recently posted a disappointing revenue forecast -- "has never been higher," Mirabaud Securities' Neil Campling said in a recent memo seen by CNBC.
From there Campling extrapolated that Apple isn't buying chips for future iPhone X production, and TSMC is burning off inventory, "because the iPhone X is dead." He blamed the situation on the $999-plus pricetag of the phone, suggesting that "consumers are turning their backs on high-priced smartphones."
There are a number of issues with Campling's contentions, beginning with the fact that in a call for Apple's December-quarter results, CEO Tim Cook said that the iPhone X had become the company's most popular iPhone, and was even the best-selling smartphone in the world during the December period.
Demand typically diminishes after the holiday shopping season, and it's conceivable that it may have fallen further still. But it would be virtually unprecedented for demand to fall so far, so fast, that Apple would decide to simply end production unexpectedly and rely on unsold inventory.
It is possible that the cost of the iPhone X has put off some shoppers. It was never intended for every iPhone buyer, which is why Apple has an iPhone in every price point from $349 all the way to $1,149 at present.
Apple might take steps to address that with upcoming devices in the fall. But to say the iPhone X is doomed on price alone is playing fast and loose with facts, because the company isn't alone on the top of the mountain. Samsung's Galaxy Note 8 starts at $950, and and a maxed-out Google Pixel 2 XL is $949. For people who utterly depend on their smartphone, the iPhone X may be worth it.
On top of everything else, Campling's memo is ignoring other possible causes of oversupply at TSMC. Apple is a major customer, but it's not the only one of significance. Morgan Stanley analysts suggest that TSMC's revenue situation may be partly based on MediaTek, and lighter demand than expected for cryptocurrency mining ASICs.
The only nugget of truth that can be mined is that the iPhone X as it stands may be a one-year phone. That may be the case, but the implication is that Apple will never go that high price-wise again because of market forces -- and that's utter nonsense.
Typically, Apple has kept the last year's pair of flagship iPhones on sale as mid-tier options for the cost-conscious. It looks like Apple could replace the iPhone X with a new trio of models, and make the iPhone 8 and iPhone 8 Plus its last-gen offerings. If that's the case, the iPhone X would be replaced with a rumored new 5.8-inch OLED iPhone. It's only April though, so it would still be early for Apple to end production on the current iPhone X, and there is zero indication that Apple has done so.
Whatever the reality of the matter, we'll probably have to wait for this fall's iPhones to get a sense for how well the iPhone X did -- that's when the company will show us by making the annual changes in its lineup.
Oversupply at Apple processor maker TSMC -- which recently posted a disappointing revenue forecast -- "has never been higher," Mirabaud Securities' Neil Campling said in a recent memo seen by CNBC.
From there Campling extrapolated that Apple isn't buying chips for future iPhone X production, and TSMC is burning off inventory, "because the iPhone X is dead." He blamed the situation on the $999-plus pricetag of the phone, suggesting that "consumers are turning their backs on high-priced smartphones."
There are a number of issues with Campling's contentions, beginning with the fact that in a call for Apple's December-quarter results, CEO Tim Cook said that the iPhone X had become the company's most popular iPhone, and was even the best-selling smartphone in the world during the December period.
Demand typically diminishes after the holiday shopping season, and it's conceivable that it may have fallen further still. But it would be virtually unprecedented for demand to fall so far, so fast, that Apple would decide to simply end production unexpectedly and rely on unsold inventory.
It is possible that the cost of the iPhone X has put off some shoppers. It was never intended for every iPhone buyer, which is why Apple has an iPhone in every price point from $349 all the way to $1,149 at present.
Apple might take steps to address that with upcoming devices in the fall. But to say the iPhone X is doomed on price alone is playing fast and loose with facts, because the company isn't alone on the top of the mountain. Samsung's Galaxy Note 8 starts at $950, and and a maxed-out Google Pixel 2 XL is $949. For people who utterly depend on their smartphone, the iPhone X may be worth it.
On top of everything else, Campling's memo is ignoring other possible causes of oversupply at TSMC. Apple is a major customer, but it's not the only one of significance. Morgan Stanley analysts suggest that TSMC's revenue situation may be partly based on MediaTek, and lighter demand than expected for cryptocurrency mining ASICs.
The only nugget of truth that can be mined is that the iPhone X as it stands may be a one-year phone. That may be the case, but the implication is that Apple will never go that high price-wise again because of market forces -- and that's utter nonsense.
Typically, Apple has kept the last year's pair of flagship iPhones on sale as mid-tier options for the cost-conscious. It looks like Apple could replace the iPhone X with a new trio of models, and make the iPhone 8 and iPhone 8 Plus its last-gen offerings. If that's the case, the iPhone X would be replaced with a rumored new 5.8-inch OLED iPhone. It's only April though, so it would still be early for Apple to end production on the current iPhone X, and there is zero indication that Apple has done so.
Whatever the reality of the matter, we'll probably have to wait for this fall's iPhones to get a sense for how well the iPhone X did -- that's when the company will show us by making the annual changes in its lineup.
Comments
One day one of these analysts will be right, and their record will improve to 1/1000.
I wonder how you get into that profession...
Is there a BS degree offered somewhere? (No, not Bachelor of Science)
i will never ever use thier services to manipulate my stocks...come on go find a job you worthless pieces of...you know what i mean. Hahahahaha
I have to wonder how many professional shorters got a sneak preview of the memo before it was released?
Just wondering you understand.
"Too late now" as you state, but thank you for your civil tone; it's a rarity for new posters.
But I'm always very interested in a better camera and am willing to pay for that.
My intuition is that FaceID components have evolved rapidly, as have the OLED screens, so there is likely enough cost reduction to make it worthwhile to replace the current X.
I do think pricing this fall will tell a lot about what actual sales have been. If they keep the $999 price point for the 5.8" device then it is a pretty safe assumption sales were very good. OTOH, if we see $899 or even $849 for the 5.8" and under $1K for the 6.4" devices then it is possible Apple is thinking price was a hindrance and a lower price will sell many more devices.
I hardly ever see great stuff available outside of his paywall, but this certainly is, and a hat tip to Ben for letting the rest of us see this.
An Android dominated world? In what sense? Profits? No. Apps? No. Also, I study a lot of webshop data and iOS is way more importent when you are selling stuff. So Android dominated world my ass.
You think that Samsings design are awesome. I don't think so. I don't like there phones and their software sucks. But hey you are using Windows an OS I would never use out of freewill.
IMO, the lengthening of the upgrade cycle from 2yrs to 3-4yrs is a bigger concern. Also, the 2nd hand and hand me down market for iPhone is huge. 1 person upgrades and they sell or hand down the old phone to spouses, kids, parents and friends. And then they hand down their old device to someone else. In 3yrs? Rinse, repeat. My dad hasn’t bought a new phone in over 6 years.
The battery replacement for $25 is also gonna impact upgrades. It has been very popular since the turn of the year. Cheap way to keep your phone for another 2yrs. Esp, the iPhone 6 and 6s models. They are still very capable devices. I have a 6 and a 6s Plus that my kids use (hand me down) and closer to the end of the year I will replace the battery on both devices. Boom, 2-3 more years out of devices that are already 2-3yrs old. 4-6 yr cycle.
Saying that they still sell 200+ million iPhones a year.