UBS analyst Timothy Arcuri believes that the ‘hardest’ moment of iPhone sales has passed and the company is still recovering in China.
According to UBS data, Apple has begun to clean up China’s inventory, and the supply chain is improving. ‘While March mix is still bad, the tone in the supply chain is starting to improve and price reductions in China may be starting to clear channel inventory’, Arcuri said.
UBS has increased its iPhone estimates for the second quarter from 32.5 million to 34.5 million. However, this is not necessarily due to the success of the new iPhone in 2019. Instead, Arcuri said the iPhone 8 Plus and other older iPhones offset the impact of lower sales on the new iPhone.
Taking into account the higher sales of older iPhones rather than the more expensive new models, UBS has lowered its AAPL revenue forecast to $56.5 billion in the second quarter, compared to an estimated $57.5 billion.
It’s not all bad news for the 2019 iPhones, though. UBS said that the purchase demand for the iPhone XR is actually expected to grow quarterly. This is an uncommon occurrence for an iPhone this late in its life cycle.
After the poor performance of the Chinese iPhone led Apple to revise its first-quarter earnings report for 2019, the company lowered the price of the iPhone in China. Tim Cook said in a recent interview that only time will tell how this strategy affects Apple.
By the way, the Wall Street Journal has been thinking, for Apple, it would be better to design the Chinese version of the iPhone to better compete with the domestic top brands.