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https://appleinsider.com/articles/18/12/11/tsmc-and-foxconn-revenues-up-contrary-to-dour-iphone-supply-chain-forecasts

In a note received by AppleInsider, Guggenheim believes the "growth via ASP" from 2017 doesn't apply for this year. The iPhone XR's lower price tag is anticipated to be "ASP dilutive," in part because Apple is deemed to have made enough improvements in the LCD-based model that it will outpace shipments of last year's iPhone 8 range by approximately 50 percent.

WTF.

Last Year 

$999 - X

$799 - 8 Plus

$699 - 8

This Year 

$1099 - Xs Max

$999 - Xs

$749 Xr ( With an Attractive option of $799 128GB )

Not only does it not dilute the ASP, even if last year iPhone 8 were split in 50/50 between Plus, the $749 is still the same ASP, not calculating into many people are going for $799 128GB version. We will likely see another ASP growth this year, along with unit growth.

tylersdad said:

Why are other smartphone manufacturers, such as Samsung, Google, and LG, able to keep their premium OLED phones under $850 and Apple is not?

We've seen from past reports that the difference in the cost of OLED and LCD isn't hundreds of dollars.

Not all OLED are equal. That is the same as LCD as well.

Not all of those OLED are Edge to Edge like Apple is. By Edge I mean it curve around the Notch and corners.

OLED is only part of the cost equation. And we all know Apple charges a premium with their product.

racerhomie3 said:

Will this have security implications?
Does anyone have an idea?
Or maybe is this to reduce costs.

No.

If you have been following the NAND and DRAM market, current prices are sky high. Hence why Samsung made record breaking profits. China has poured in tens of billions into the market, in the hope that by 2025 they will have at least 50% of computer component sourced within China. NAND and DRAM are first step into it as they are much easier. Fabs for SoC will follow after but dont expect they catch up to cutting edge anytime soon. 

We dont know how this will turn out yet. Normally China's extremely aggressive race to bottom ( or below bottom ) should give its competitor some pressure. However non of these NAND Fabs are 3D Stack based. At least not initially, so it really depends how much they are willing to burn.

Of Course Apple has long been not happy with the NAND prices, one reason it throw money into the Toshiba NAND bidding process to secure enough NAND at reasonable price.

Samsung, SK, Micron, are all well prepared for this, they have been working hard on yield, transferring to 3D NAND as fast as possible at the expense of lower capacity.

P.S - What I am surprise though is they dare to approach Apple. I was thinking they will work with local supplier first. But Given how quickly BOE improves their OLED, may be DRAM is going better expected as well.

rogifan_new said:

Stock is down almost 5% today. Everyone long on Apple why do you think Wall Street sentiment on the company is going to change? Services revenues are up, other revenues from accessories are up. iPhone ASP is the highest it’s ever been and yet the stock is down nearly 5%. What is going to ever make them bullish on Apple?

Possibly Never.

I am not sure how I could possibly better explain this and get the point across. People has been pointing fingers and calling me bull shit.

You must separate yourself from an Apple Fan boy ( like AI is ) to actual investing and sentiment, or there is a combined word for it, the "market".

Before anything else, Apple is doing great, flipping great. There is no other way to put it. But, when people say Apple is doomed, some actually mean Apple "is" doomed, like hard core Android fans, some actually means Apple is not doing as well as they expected. Or According to AI those has reading comprehension problems.

Let's define what super cycle is, and also referred a few times in Bloomberg and other financial media. They were expecting a iPhone 6 Plus cycle, where everyone was rushing to buy it, and it was by and large the majority of iPhone sold during its initial launch, mostly helped by China.  The iPhone 6 Plus cycle, sold 135M Unit combined  in Q1 and Q2, staggering number.

Wall Street / Market kind of expect / want this to happen, people will rush to buy iPhone X, more new user to iPhone ecosystem, more users upgrade, and it will be the sold in vast majority of it, bringing up ASP and Unit Sales.

Remember this is iPhone X here, not iPhone 8 or else.

This is high expectation, or ridiculous in numbers. So from that point of view, iPhone X failed. So when Nikkei posted news about 40M unit in Q1 and 20M in Q2, it wasn't that bad at all. Yes AI and other dont like the word production cut in half, which is likely true in seasonal sales. Market was secretly expecting Apple to even beat the 80M unit number, and wanting like 50M+ iPhone X.   

So while iPhone X did not create a super cycle, it was Ok when the results came along. iPhone X is leading iPhone sold every week, ASP is nearly $800. And one reason why Ming from KGI is already hyping the super cycle is still to come next year when Apple has even more new iPhone next year.

Problem is all these expectation is already priced in*, one reason why Apple is trading at P/E 17x now instead of its usual 15 in the past three to four years.

(*Actually that is not entirely true, Berkshire Hathaway buying was the main causes of (slight ) spike, lots of traders, even on twitter was seeing / guessing someone buying lots of AAPL stocks, and it later became clear it was Berkshire Hathaway )

So why is AAPL so undervalued, even at a P/E 17 is very low, compared to the current S&P average of 26, or Tech stocks from Google and the like of close or above 30.

Investor generally view Facebook, Microsoft, Amazon and Google as monopoly. And that is very much true.

Social Network? If you view the world Top 6 social and instant messenger network, five of them are from Facebook, one is WeChat.

Microsoft? The world is still running on Excel. Business is still on Windows, growing lock in ( Actually it is not but that is how they view it ) in Azure , Services and Office.  

Google? Android and Search ( Ads ) Literally Zero direct competition. 

Amazon? You want to place your bet against Jeff Bezos?

Apple? Apple doesn't have a monopoly. Or it does, it is called customer loyalty. But it is hard to quantify loyalty, or not quantify it, but price or value it. It is much easier for investor to understand Microsoft and Facebook lock in, especially when both dont have its competitor in its field. iOS has Android, macOS has Windows. Apple Music has spotify etc. Each and every major Apple product or services has a major market share competitor.

There is also, always the fear that the current pricing of iPhone and Unit sold, with its margin is not sustainable. I have seen this asked a few times already, and there is yet an answer. No other company in the history of man kind has created a product that is as widely popular as the iPhone, at such a price range, being used now and still growing slightly, and has such a NET margin. None. Zero. ( The closest thing is oil from Saudi where cost is zero and they keep bumping. )

So it may be forgiveable one does not know how to value such company that man kind never seen before.

You asked: What? AAPL is down not because of its report, but Wall Street as a whole is looking for safety from raising interest rate.

Well yes, and that Safety was established long ago, AAPL at around P/E 15.