This fall is shaping up to be a big one for Apple (NASDAQ:AAPL). Three new iPhones are expected to launch in a matter of weeks. Unlike last year’s iPhone X release, manufacturing challenges and concern about high prices don’t look like an issue. As a result, a report out of Apple’s supply chain suggests this could be the biggest iPhone launch since 2014’s iPhone 6.
That’s expected to pay off with record Q4 earnings for Apple suppliers — and a big boost for AAPL stock.
Report: Apple to Ship 70 million+ New iPhones by End of 2018
Digitimes (via MacRumors) published a report based on sources within Apple’s supply chain that predicts the company could ship between 70 million and 75 million of its new iPhones by the end of 2018.
That would put the company on track for its best performance with new iPhones since the iPhone 6 series was released in 2014. Remember, these are not total iPhones sold numbers — the company will continue to sell existing inventory and to produce other models like the iPhone SE — this is shipments for the trio of new iPhones to be announced in September.
To put the numbers in some context, iPhone 6 shipments in 2014 were estimated at 80 million units. This was at the height of the smartphone market and that iPhone launch was Apple’s first crack at a big-screen smartphone, so there was huge pent-up demand.
Why a Massive iPhone Launch?
Last year’s iPhone launch did not go as planned. Not for Apple fans, not for Apple investors and not for AAPL stock. The 10th anniversary of the iPhone was meant to be a massive affair, with the regularly scheduled iPhone 8 but more importantly, the radical new iPhone X. The iPhone X was an all-new design, featured Apple’s first OLED display and ditched the Home button for a TrueDepth camera and FaceID. The new flagship was also the company’s most expensive smartphone ever, with a starting price of $999. Record order numbers were being thrown around.
The iPhone X ran into production issues that resulted in a staggered release and limited supply, derailing the massive iPhone launch numbers that had been expected.
This year is on track to be very different. On the negative side, however, we appear to have hit peak smartphone. In Q4 2017, smartphone shipments declined for the first time ever. However, the iPhone X has proven more popular than expected and its notched display has turned into the must-have feature that is being copied by competing smartphones. Alphabet’s (NASDAQ:GOOGL) Google division officially integrated notch support into Android.
There are millions of iPhone owners who didn’t upgrade to the iPhone X because of the price, or because of the notch. Now, the $999 price tag doesn’t seem so extreme and the notch has become cool. That means the outlook for the upgraded iPhone X (iPhone Xs?) this year is good. But AAPL is expected to also double down with a Plus version, equipped with a 6.5-inch OLED display — the biggest ever on an iPhone and edging out the Samsung Galaxy Note 9 phablet.
But the real key to the expected massive iPhone launch this fall could be a new 6.1-inch iPhone. It incorporates the key iPhone X features like the TrueDepth camera, notch and near bezel-free display, but uses a less expensive LCD panel instead of OLED. As a result, Apple is expected to be selling this model for between $600 and $700. The icing on the cake? The company is reportedly pulling out all the stops, by also adding bright new color options into the mix. It’s expected to attract hordes of upgraders who want the iPhone X look and features, but on a budget.
As a result, DigiTimes’ sources predict:
“The impressive upgrades in overall designs and functions as well as the price-friendliness of the 6.1-inch model should give the new devices a shipment momentum much stronger than their two preceding generations.”
Good News for Apple Suppliers and AAPL stock
Manufacturing between 70 million and 75 million new iPhones is expected to boost the outlook for Apple suppliers. Foxconn and Taiwan Semiconductor (NYES:TSM) — the primary assembler of new iPhones and the supplier of Apple A-series processors used in iPhones respectively — are both predicted to have record Q4 revenue.
Naturally, if the new 2018 iPhone releases meet expectations, there is also considerable upside for AAPL stock. Considering how it’s performed since the 2017 iPhone launch — up 37% — the prospect of shipping considerably more units this time around is good news for AAPL investors.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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