Apple: Only 5M iPhone X at Launch, Says BlueFin

Analysts John Donovan and Steve Mullane of the boutique research firm BlueFin Research Partners, today pile onto the rumors of Apple's (AAPL) iPhone having a later production ramp this year than in years past, writing that "builds" of the next model have been "cut sharply" in the September and December quarters, but it'll be made up for by greater production in the first half of Apple's fiscal year, which comprises the December and March quarters.

Similar to Morgan Stanley's Katy Hubertyyesterday, the analysts advise investors " don't fret the delays, as we view any missed near-term iPhone shipments will be more than made up later."

Without citing sources, the analysts write that "We have finally seen some undeniable indicators that builds for the Apple iPhone X have shifted out into CQ4 and 1H18."

"Our reads now suggest that AAPL will build only 5M iPhone X in the September quarter, supporting the view that the OLED iPhone availability will be extremely limited initially."

The analysts add that there is a "head fake" in looking at the supply chain, because parts are being ordered by Apple far in excess of what's actually being assembled:

Interestingly, component supplier marching orders from the company are firmly "up and to the right" with pressure for MORE parts even in light of the shift in builds. Table 1 below illustrates the updated build schedules with splits of next generation iPhones highlighted.

Beware of the head fake -- suppliers expedited to increase shipments despite build push-outs. As iPhone 7s and X versions are undergoing shifts and pushouts, the component sector feeding the AAPL ecosystem is in expedite mode. While iPhone X builds are being pushed out, component suppliers are being tasked with supplying parts far in excess of corresponding near-term build schedules and thus an enormous amount of misinformation and fake news is circulating. We caution those closely following this launch that there seems to be a cavernous disconnect between component orders and iPhone builds, making revenue modeling extremely difficult. In actuality, we have raised our outlook for builds and ships from 4Q:17 through 1H:18 even in the midst of some component orders far surpassing our expectations and some lagging due to probable inventory accruals earlier in the process.

Apple shares today are down 76 cents, or half a percent, at $148.80.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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