With Apple (NASDAQ:AAPL) prepared to host its annual developers conference in early June, the consumer electronics behemoth will take a few days to focus on software and services designed to appeal to its developer community. It automotive parlance, it will be a lot of “under the hood” stuff.
But, while Apple (AAPL) will use its WWDC to appeal to program and app developers, the iPhone–the main device that continues to drive Apple’s (AAPL) business–remains front and center in the minds of many investors, and analysts that cover the company. And anything that could upset the iPhone apple cart is likely to cause some concerns about where Apple’s (AAPL) overall business is headed.
Loop Capital managing director John Donovan said that Apple (AAPL) may use the Memorial Day weekend to update the number of iPhones it will have built during the second quarter of the year. Donovan said that for Apple’s (AAPL) current quarter, he sees the company building 42 million iPhones, compared to consensus expectations for 44 million devices. Donovan said such a discrepancy is “not surprising, given fears of not getting ample parts and commonality of key parts across several families of products.
Donovan said that just as important are Apple’s (AAPL) iPhone shipments, which he estimates will be in a range of 41 million to 43 million phones, or about 6 million fewer than consensus estimates. Donovan said Apple (AAPL) needs to ensure that key iPhone parts, such as processors from Taiwan that are commonly used on several iPhone models, remain at levels needed to support the company’s supply chain, and reduce wait times on iPhone orders by consumers.
Going forward, Donovan estimates that Apple (AAPL) will build 57 million iPhones, and ship between 50 million and 51 million iPhones, or as much as 5% less than consensus forecasts, during the third quarter of this year.
Donovan said that “usual suspects” would likely have an impact on Apple’s (AAPL) iPhone numbers: Chinese Covid-19 lockdowns, supply chain issues and rising inflation that has shown few signs of slowing down.
“Getting a grasp on true [iPhone] demand is elusive,” Donovan said. “But what is clear is that demand not materializing as sustainably as predicted.”
Donovan said that investors should also “beware” of what he called “end of quarter machinations to juice [iPhone] numbers” on the part of Apple (AAPL). For its part, Apple (AAPL) doesn’t provide unit sales figures for the iPhone.
Meanwhile, TF International Securities analyst Ming-Chi Kuo weighed in on the iPhone matter, saying that the industry checks suggests Apple (AAPL) is still on track with its shipping plans for the iPhone 14, which if history holds, Apple (AAPL) debut in either September or October in time for the end-of-the-year Christmas and holiday shopping season.