Apple is retreating from planned production increases for the iPhone 14 after an expected surge in demand “failed to materiaize,” according to a Bloomberg report. But one analyst says the real story is the overperformance of the company’s flagship iPhone 14 Pro.
Bloomberg, citing unnamed sources “familiar with the matter,” said Apple had originally planned to increase assembly of iPhone 14 mobile phones by up to 6 million units in the second half of 2022. The report said the Cupertino-Calif.-based computer and mobile phone powerhouse now aims to produce 90 million phones for the period, about the same as last year’s production of iPhone 13 devices and in line with Apple’s original production estimates.
Webush analysts Daniel Ives and John Katsingris are keeping their “outperform” rating on Apple despite downward pressure on the stock following the Bloomberg report. “Clearly this negative news in light of an already shaky macro and jittery market will send shockwaves across the Street with investors concerned this is another shoe to drop in this dark market with golden child Apple front and center,” the analysts wrote in a note Wednesday morning.
However, the duo sees a silver lining in pumped up demand for the top-of-line iPhone 14 Pro. “… Pro demand remains robust based on all data points we see across the US and China…” They said the demand “means much higher ASPs [average selling prices] and a clear tailwind for Apple into FY23 at this pace.”
Apple announced the new iPhone 14 earlier in September at its “Far Out” event and, in a surprise for many observers, used the iPhone 13’s A15 Bionic chipset in the iPhone 14 entry line. The company has typically upgraded chips for the entire line with new releases. The iPhone 14 Pro got the A16 chip – which Apple says is the fastest chip ever in a smartphone.ADVERTISEMENT
Wired rated the iPhone 14 7/10 in their review, saying there were too few differences between last year’s iPhone 13: “This is the problem for Apple. The few elements the public might recognize as new have gone into the iPhone 14 Pro Models… If Apple wants you to upgrade, there needs to be an obvious reason, or reasons, to do so – ones the average person can recognize and get excited about,” wrote reviewer Jeremy White.
While it’s no secret that consumer demand for tech has been softening after a pandemic-fueled boom, Apple has stayed one step ahead with better-than-expected financial results. “The softness on the base iPhone model is a clear sign that in this weaker macro [economic situation], consumers are not paying up for a smartphone that is pricey with minimal enhancements from iPhone 13…” Ives and Katsingris wrote in the Wedbush note.
In an interview with CRN, Ives said there was no sugar-coating the disappointing base model sales. “Clearly, this was a misstep by Apple, which is rare for them,” he said. “It’s going to be a tight wire balancing act going into the holidays. You can’t smoke-and-mirror it – the base model was disappointing and that’s what’s going to be available on the shelves. So they will have to get the balancing act right.”
Still, Wedbush is maintaining its $220 price target. Apple stock dropped 3.8 percent to $145.85 per share in early morning trading, but as of 10:45 a.m. EDT had recoverd somewhat and was trading just above $147 per share, down about 3 percent from Tuesday’s close.
CRN has reached out to Apple for additional comment.LEARN MORE: Smart Phones
Shane Snider is a senior associate editor covering personal computing, mobile devices, semiconductor news, hardware reviews, breaking news and live events. Shane is a veteran journalist, having worked for newspapers in upstate New York and North Carolina. He can be reached at [email protected].
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