Apple AAPL is likely to release three iPhone models this year, according to The Wall Street Journal, quoted by Reuters. The company is expected to continue with the next-gen version of the lower priced iPhone XR that has struggled to gain foothold since its release in October 2018.
Moreover, the high-end model is expected to have a triple rear camera. This feature has already been leaked by OnLeakes, as quoted by Macworld. The other two models are likely to get double rear camera. Further, Apple is anticipated to use OLED display in all of its iPhone models in 2020.
Is iPhone Losing Luster?
Apple recently cut its first-quarter fiscal 2019 sales guidance citing weak demand in Greater China and fewer upgrades to its flagship device. Notably, in fourth-quarter fiscal 2018, Greater China accounted for 18.1% of total sales, which increased 16% year over year to $11.41 billion.
Apple Inc. Revenue (TTM)
Apple Inc. Revenue (TTM) | Apple Inc. Quote
Most recently, Nikkei reported that Apple is lowering its new iPhone production plan by almost 10% for the next three months. The cut applies to all three iPhone models. Notably, in December 2018, the company had lowered its new iPhone production target for the January-March quarter.
Nikkei cited sources, according to which “overall planned production volume of both old and new iPhones will be reduced to about 40 million to 43 million units for the January-March quarter from an earlier projection of 47 million to 48 million units. This decline would represent a year-on-year contraction of more than 20% from the 52.21 million units Apple sold in January-March 2018.”
Apart from weak China demand, Apple is also suffering from its failure to penetrate rapidly growing but price sensitive markets of Asia, particularly India. The steep pricing of new iPhones is making it difficult for the company to gain market share in India where Chinese smartphone makers like Xiaomi dominate.
Sluggish iPhone Demand Hurts Suppliers
Notably, the sluggish demand for iPhone has negatively impacted several Apple suppliers like Cirrus Logic CRUS, Dialog Semiconductor, Japan Display, Skyworks Solutions SWKS, Qorvo QRVO, Lumentum Holdings, Broadcom and British chipmaker IQE.
Recently, Skyworks trimmed guidance for first-quarter fiscal 2019. According to Skyworks’ CEO Liam Griffin, "unit weakness across out largest smartphone customers" was the primary reason for the lower outlook.
Per Reuters, iPhones’ biggest assembler Foxconn recently reported 8% decline in December revenues, its first year-over-year monthly revenue dip since February, 2018. Notably, Foxconn has been planning to cut expenses by 6 billion Yuan in its iPhone business, primarily due to lackluster demand.
Apple currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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