Demand for Apple's iPhone XS series is likely to slow down later in 2018 after the initial fanfares for the new gadgets fade away, due largely to the high pricing set for the new devices, particularly for the iPhone XS Max, according to sources from Taiwan's handset set supply chain.
One of the major indicators was that the first wave of the sales of the iPhone XS and XS Max was not as enthusiastic as that of the previous iPhone 6 generation, as consumers have apparently shunned away the iPhone XS Max for its extremely higher price and also the iPhone XS for a lack of specification upgrades, said the sources.
If the sales momentum for the iPhone XS and XS Max does slow down as expected or global sales of the two new devices are lower than expected, Apple may reduce significantly its orders to supply chain makers at the same way as it did for the iPhone 6s and iPhone 7, commented the sources.
While some analysts are positive about the sales prospects for the iPhone XR, which is to available in late October, some supply chain sources are rather conservative given the price/performance ratio of the iPhone XR is not particularly impressive as compared to those of high-end Android phones.
Supply chain makers which have committed heavy investments for facilities upgrades in order to secure orders from Apple may bear the risks of possible disappointing sales of the new iPhones, stated the sources.
Buoyed by its brand premium, Apple has still enjoyed robust growths in revenues and profits even though combined sales of the iPhone 8 devices and iPhone X have so far below those of the iPhone 6 devices, indicated the sources. In other words, Apple's performance might not be affected if sales of the new iPhones were lower than expected,
However, in respect to the supply chain, with the exception of Taiwan Semiconductor Manufacturing Company (TSMC) and Largan Precision, both of which boast technology advantages, other suppliers such as Pegatron and most of PCB makers have not seen their profits improve significantly so far in 2018, the sources indicated.
A recent Bloomberg report indicated that Taiwan's Apple suppliers have seen their share prices fall as shipment growth has stagnated. For example, the share price of Foxconn Electronics (Hon Hai Precision Industry) has slumped 38% since hitting a record price in the middle of 2017.
In fact, Foxconn saw its net profits decline 9.42% on year to NT$41.57 billion (US$1.355 billion) in the first half of 2018, and the EPS for the six-month period stood at NT$2.4 compared to NT$2.66 a year earlier.
Additionally, it remains to be seen whether demand for the new Phones, particularly the iPhone XR which support dual-SIM, will jump up in China given the trade war between the US and China could continue escalating, the sources lamented.
Article translated by Steve Shen
