With the iPhone 8 Plus turning out to be more popular than the smaller iPhone 8 and the iPhone X demand far exceeding Apple’s expectations, the Cupertino company is looking to lower the iPhone 8 production by 50-60 percent QoQ sequentially in Q4 2017.
The claim has been made by KGI analyst Ming-Chi Kuo in his latest investor note. He cites the lower than anticipated demand for the iPhone 8 as the reason behind Apple reducing its production.
Pegatron — iPhone 8 production to decline 50-60% QoQ in 1Q18F on lower-than-expected demand: With fewer major selling points and given a consumer preference for iPhone 8 Plus on a limited price gap, we expect iPhone 8 production orders to see 50-60% QoQ decline in 1Q18F, potentially shrinking Pegatron’s utilization rate. But considering new iPhone orders may become more diverse (compared with a single model of iPhone 8 in 2H17), and assuming the new models will come with more compelling features than iPhone 8, we are positive on Pegatron’s growth momentum in 2H18F.
Apple’s CEO Tim Cook had previously revealed that the iPhone 8 Plus had gotten off to the fastest start of any Plus models. Data from other analytics firms also point to the iPhone 8 Plus outselling the iPhone 8, with buyers looking for something more premium going in for the iPhone X. Kuo remains optimistic about the iPhone X production rate improving before the holiday season which should help create some balance between supply and demand. To improve production, Apple’s supply partner Foxconn will convert some of its iPhone 8 Plus production lines to manufacture the iPhone X. Apple is expected to post record revenues in Q4 2017 based on the strong demand for the iPhone X. It is in fact even expected that the company will surpass Samsung to become the world’s largest smartphone manufacturer in the last quarter of this year.