Shares of Apple and some of its suppliers fell yesterday on signs that demand for the new iPhone 8 models isn’t as strong as anticipated while buyers await the release of the higher-end iPhone X.
Taipei-based Economic Daily News reported that Apple had cut orders for its latest model, which went on sale last month, by more than 50%. The newspaper didn’t identify its source or elaborate on what sort of orders had been pulled, or how it arrived at that number. An Apple spokeswoman declined to comment.
In the US, AT&T’s customers upgraded 900,000 fewer handsets in the three months to September than a year earlier, it said in a regulatory filing. The trend hints at customers waiting for the flagship iPhone X to buy a new phone. There’s a “more anaemic appetite for the iPhone 8 right now,” Joe Natale, chief executive of Canadian carrier Rogers Communications, said in a conference call.
“There’s lots of anticipation around the iPhone X and what it has to offer,” he said. Many analysts already expected that the iPhone 8 would be overshadowed by stronger demand for iPhone X, which is scheduled to be released next month.
However, investors are sensitive to any potential demand weakness for Apple products. “It puts more pressure, more focus on the iPhone X, but that’s the Super Bowl event,” said Daniel Ives, head of technology research at GBH Insights.
“I view the iPhone 8 as really just a placeholder,” he said. Apple shares slid up to 2.8%. The stock had risen 38%, and had is close at a new high earlier this week, buoyed largely by anticipation for the iPhone X. Shares in Pegatron, a contract assembler that gets almost 60% of its revenue from Apple, fell up to 2.7% in Taipei trading.
Other suppliers including Catcher Technology and AAC Technologies also declined.
Earlier reports have also flagged weak demand for the iPhone 8, though investors are mostly expecting a sales surge from the high-end iPhone X when it becomes available November 3.
With its $999 (€848) price tag, the iPhone X will do more to help boost Apple’s margins. The top-of-the-line model includes a facial recognition system that uses a 3-D scanner to unlock the handset, replacing the fingerprint sensor in the iPhone 8 and other earlier versions.
Apple forecast sales of $49bn to $52bn in the three months to September, a projection investors understood to signal resilient iPhone demand that could also carry over into the December quarter, given the staggered phone release dates.
Analysts see sales in the US holiday quarter jumping 10% to $87bn. “What’s lurking is a question of is this just people waiting for the X or is there weakness in overall demand?” said James Cordwell, an analyst at Atlantic Equities.
“A demand problem is more of a fundamental issue,” he said. The Economic Daily said the lowered orders mean shipments of iPhone 8 models could come in at just five million to six million a month in November and December.
The newspaper also said Apple is grappling with production hiccups that could disrupt supply for the iPhone X. The issue isn’t difficulties securing supply of cutting-edge organic LED screens or three-dimensional sensors but of glass panels, it said.