Production Problems Could Cut iPhone 8 Sales by 20 Million
May 11, 2017 by Douglas A. McIntyreThere have been a large number of rumors that Apple Inc. (NASDAQ: AAPL) will have trouble meeting demand for the iPhone 8. Many of these are related to problems with suppliers. A new forecast puts the shortfall as high as 20 million for 2017, when the smartphone is released later this year.
Much of the support for Apple’s $800 billion market cap is based on a home run for the iPhone 8. It has been described as the largest step forward in technology and features since the iPhone was introduced in June 2007. Apple’s revenue in the last calendar quarter of 2017 will lean heavily on sales of the latest version.
According to a report from Taiwan-based securities firm KGI, iPhone 8 production for 2017 may be pushed as late as November, compared to earlier forecasts that put the start as early as August. KGI research analyst Ming-Chi Kuo was quoted by industry publication 9to5 Mac:
We are seeing more evidence that the worst-case scenario forecasted in our April 19 report could materialize, where new iPhone shipments in 2H17F are revised down to 80- 90mn units from 100-110mn units (vs. consensus of 100-120mn units).
Apple sold 50.7 million iPhones in its fiscal second quarter of 2017, which ended April 1. This was down from 78.2 million in its first quarter, which included the 2016 holiday season.
If most forecasts about the iPhone 8 are true, its sales will be extremely strong whenever it is released. Many reports say it will have two cameras, a screen that runs all the way to the phone’s corners, wireless charging, an organic light-emitting diode (OLED) display that does not require backlighting, and a much faster processor. The iPhone 8 also is expected to be more expensive than the iPhone 7, which will improve Apple’s revenue and gross margins once the new version goes on sale.
Apple recently became the first public company to have a market cap over $800 billion. Several Wall Street analysts have stock price targets that would put the figure closer to $1 trillion. However, much of this rests on iPhone 8 sales and how soon Apple can begin them.
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