X fails to hit the spot for Apple

Apple shares dropped on a report that it will slash sales forecast for iPhone X in the current quarter.
A man leaving an Apple Store in Los Angeles with his new iPhone X as others wait to buy theirs on Nov 3, when it was released. Analysts have cut iPhone X shipment projections for the first quarter of next year.
A man leaving an Apple Store in Los Angeles with his new iPhone X as others wait to buy theirs on Nov 3, when it was released. Analysts have cut iPhone X shipment projections for the first quarter of next year.PHOTO: AGENCE FRANCE-PRESSE

Analysts cut forecasts for new iPhone, saying high price and lack of new features hurt demand

BEIJING • Apple looks like it's having a not-so Merry Christmas.

Analysts have lowered iPhone X shipment projections for the first quarter of next year, citing signs of lacklustre demand at the end of the holiday shopping season.

Sinolink Securities analyst Zhang Bin said on Monday that handset shipments in the period may be as low as 35 million, or 10 million less than his previous estimate.

"After the first wave of demand has been fulfilled, the market now worries that the high price of the iPhone X may weaken demand in the first quarter," his report said.

JL Warren Capital said shipments will drop to 25 million units in the first quarter of 2018, from 30 million in the fourth quarter, citing orders at some Apple suppliers.

The drop reflects "weak demand because of the iPhone X's high price point and a lack of interesting innovations", the New York-based research firm said in a note to clients last Friday.

"Bad news here is that highly publicised and promoted X did not boost the global demand for iPhone X," according to the note.

Apple has been counting on a redesigned 10th anniversary iPhone to boost shipments as its market value advances towards US$1 trillion (S$1.35 trillion).

The California-based company is facing new challenges from South Korea's Samsung Electronics, which is quickly recovering from the Galaxy Note 7's recall after fires. In the meantime, Chinese brands like Huawei, Oppo and Xiaomi are also luring away potential customers in China and other emerging markets such as India.

Apple is said to have trimmed its first-quarter sales forecast to 30 million units from 50 million, Taiwanese newspaper Economic Daily News reported, citing unidentified supply chain officials.

It also said Hon Hai Precision Industry's main iPhone X manufacturing hub in Zhengzhou, China, has stopped recruiting workers. The company, also known as Foxconn, is the sole iPhone X assembler, and also makes the handsets in Shenzhen and Chengdu.

Shares of Asian suppliers, such as Lens Technology, Shenzhen Desay Battery Technology and Largan Precision, fell on Monday on the report. Lens recovered some of the losses yesterday, while Largan continued to slide. Shenzhen Desay was little changed.

Hon Hai shares slid for a second day yesterday. Touch-screen maker General Interface Solution Holding plunged 8.4 per cent yesterday after slipping slightly on Monday.

Apple got a rare downgrade last week from Nomura Instinet analyst Jeffrey Kvaal, who said iPhone X sales as well as other positive factors are already baked into the stock price. He lowered his rating to "neutral" from "buy".

The stock has soared 51 per cent this year, bringing its market value to almost US$900 billion.

Customers seem to be opting for cheaper models of the iPhone, according to Cowen & Co, which says that suggests Apple has failed to cram enough new technology into the iPhone X to justify a US$999 price tag.

New features such as facial recognition and virtual reality herald Apple's vision for future smartphones, but other issues like the lack of augmented-reality apps cooled buyer interest in those technologies.

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A version of this article appeared in the print edition of The Straits Times on December 27, 2017, with the headline 'X fails to hit the spot for Apple'. Print Edition | Subscribe