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Cupertino tech giant Apple Inc's stock has rallied on the market this year after it plateaued following the company's first earnings estimate revision in years. The stock hit a new low of $139.90 the day after Apple (NASDAQ:AAPL) announced the revision. Since then, the company has broken all of its previous stock price records on the market, and it has consistently traded at all-time highs in excess of $220; where the share price stood prior to the ill-fated revision.
Apple's CEO Mr. Tim Cook blamed sales in China for his company's problems at the time. If early supply chain indicators from the country are correct, then the East Asian country is refusing to show love to the iPhone. Fresh estimates from Rosenblatt Securities suggest that Apple's iPhone sales went down by 30% year-over-year in China last month. Take a look below for more details.
Apple Set To Face Serious Headwinds In China Next Year With Production Cuts Of Up To 60% For iPhone 11 Lineup Expected In March Due To 5G
Most of the reports related to the 2019 iPhone lineup's sales that have surfaced so far suggest that it's the iPhone 11 that is proving to be very popular among buyers. However, these reports have often, if not always, focused on the U.S. market, where users are attracted to the smartphone because of a low price point.
Following earlier whispers that the iPhones 11 aren't doing so well in China, Rosenblatt Securities is reporting that not only is the iPhone 11 lineup performing well in the country, but that the bulk of this interest is due to the LCD iPhone 11. Additionally, the firm believes that the popularity of the entry-level 2019 iPhone is cannibalizing sales of older models; something which Apple should be proud of achieving given the slowdown of the smartphone's upgrade cycle.
However, despite the uptick in popularity, Apple's overall sales of the iconic smartphone declined in China last month as reported by Credit Suisse last week. If today's report stands the test of time, then these will mark only the start of Apple's problems in China. Some of the estimates that are currently floating around for 5G smartphone shipments made this year in the country suggest that approximately 5 - 5.5 million users will get these devices for use by the end of this year.
This amount seems small compared to even the 189 million units that Apple reportedly shipped in its previous fiscal year. However, it will grow in the future, and given the fact that Apple (NASDAQ:AAPL) isn't out with a 5G iPhone yet, its headwinds in China will only get stronger next year. Rosenblatt believes that iPhone production will be cut down by 40% - 45% quarter-over-quarter in March next year, and the iPhone 11 lineup will witness a 60% production cut for the same period. Finally, the firm also believes that Apple will manufacture 12 million iPhones in the three months between March and June. These, however, will only be a drop in the bucket for the company's overall iPhone shipments
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