Over the last few days, there have been several different reports -- some of them contradicting each other -- about iPhone X sales and order trends.
After piecing together all of this data with what has been reported before, as well as what's known about Apple's (AAPL) sales expectations and iPhone X shipping times, the situation doesn't look half as bad as some headlines and reported figures might suggest. But there is a possibility that the X's high starting price -- particularly in foreign locales where taxes and/or tariffs make the phone much more costlier than in the U.S., where it starts at $999 -- is pressuring demand some.
Apple shares fell nearly 3 percent on Dec. 26 after a report from Taiwan's Economic Daily News (citing unnamed sources) said the company will cut its March quarter iPhone X sales forecast by 20 million to 30 million. The stocks of chip suppliers such as Cirrus Logic (CRUS) , Broadcom (AVGO) and Skyworks (SWKS) also got hit.
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The report came shortly after one from Taiwan's Digitimes, citing sources in the chip packaging and testing industry, stated iPhone X shipments are forecast to reach 30 million to 35 million this quarter and "stay flat or drop slightly" in the March quarter. The site added that Apple has been "rumored" to be planning iPhone price adjustments in early 2018.
Separately, research firm CIRP disclosed that a survey of 300 recent U.S. iPhone buyers found that 30% of them bought the X during the phone's first month of availability, while 39% bought the iPhone 8 or 8-Plus and 31% bought older iPhones.
In addition, mobile analytics firm Flurry reported the X accounted for just 14.7% of iPhones activated globally during the week leading up to Christmas; the 8 and 8-Plus accounted for 16.8%, and older iPhones the rest. On the bright side, Apple devices accounted for 44% of Flurry's tracked phone and tablet activations, even with the percentage a year ago.
Amid all these reports, analyst commentary about iPhone X demand has been mixed. Sinolink Securities and JL Warren Capital each cut their March quarter iPhone X shipment forecasts, though it's worth noting Sinolink's new estimate (35 million) is much higher than JL Warren's (25 million). Meanwhile, B. Riley FBR, Rosenblatt Securities and Loup Ventures' Gene Munster defended Apple.
Rosenblatt speculated that the Economic Daily News might be confusing iPhone 8 order cuts with iPhone X cuts, and said their supply chain checks pointed to healthy demand and no OLED panel or 3D sensor order cuts. On the other hand, JL Warren reported that some Apple suppliers have seen reduced orders
What to make of all this? First of all, it's unlikely that Apple ever expected to sell 50 million iPhone X units in the March quarter, especially considering the consensus analyst estimate for the quarter's total iPhone sales is only at 62 million. As Munster notes, Apple has a history of initially placing outsized orders with iPhone suppliers to make sure it can meet demand, and later paring them back. It could be that the Economic Daily News was provided info from a supplier that had seen this phenomenon play out.
The iPhone X is Apple's most expensive iPhone ever.
Second, December quarter shipments of 30 million to 35 million -- the range suggested by Digitimes' report -- would still be pretty healthy, given that iPhone X pre-orders only started on Oct. 27 and the phone was supply-constrained during the first few weeks of sales. On Nov. 11, plugged-in KGI Securities analyst Ming-Chi Kuo had only forecast December quarter X sales of 22 million to 24 million. A couple weeks later, Kuo, citing improved production, said shipments could be 10% to 20% higher than his prior forecast, but that would still leave them short of 30 million.
