Published: Tue, November 13, 2018
Money | By Armando Alvarado

Analyst lowers prediction of iPhone XR shipments by as much as 30%

Analyst lowers prediction of iPhone XR shipments by as much as 30%

Analysts said that this could only refer to Apple.

South Korean electronic parts suppliers Samsung Electro-Mechanics Co Ltd, Apple's supplier of multi-layer ceramic capacitors, dropped more than 5 percent, while LG Innotek Co Ltd plunged 9.5 percent.

"Suppliers are more dependent on volume than Apple", said Woo Jin Ho, an analyst at Bloomberg Intelligence. He predicts shipments in the 47-52 million range, compared to 52 million sold in the first quarter of 2018. That makes them more likely to cut prices when Apple comes back to the negotiating table.

With the iPhone XR being as it is, the Huawei Mate 20 series is providing an alluring alternative, which is hurting Apples potential sales. These two companies are also Apple's 2nd and 3rd largest suppliers of VCSEL arrays - behind Lumentum - for augmented reality applications.

"Apple is no longer a traditional hardware business", said Gene Munster, a veteran Apple analyst at Loup Ventures.

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'Although Apple has positioned itself as a super-expensive handset maker providing high-end products, its strategy has not been working in emerging markets including China and India as Chinese vendors have been making iPhone-like products'. That will likely discourage people from upgrading to newer devices - another ominous sign for suppliers.

Apple's iPhone XR, which boasts the iPhone X's edge-to-edge display, albeit using older LCD pixels instead of the X's high-resolution OLED screen, was widely expected to fuel a massive wave of upgrades from users of the iPhone 6S or earlier models.

More recently, Apple launched a new version of its operating system, iOS 12, that supports an unprecedented 28 of the company's devices, including models that went on sale in 2013. The Street values net income growth much more highly than earnings per share growth, and thus Apple's aggressive share repurchase programme is not necessarily a value creator in the short term. Both companies count Apple as one of their major customers.

That could extend iPhone replacement cycles by six months to 3.2 years and push unit sales down by 6 percent a year for three years, he estimated.

The company creates components for the front-facing camera of Apple's newer iPhones that enable FaceID and augmented reality. Apple also provided lukewarm guidance for the all-important holiday quarter.

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