KGI:

While the iPhone X is already considered to be a major profit driver for Apple, a new report from KGI Securities now highlights that the shipments for the flagship iPhone model are not likely to meet its original market estimates. The report claims that the Cupertino company will ship around 18 million iPhone X units in the current quarter, strikingly lower than the ongoing estimates of 20-30 million units. Moreover, it is believed that the original version of the iPhone X will “go to end of life around mid-2018” to give a space to its next-generation models that would include a cheaper, 6.1-inch LCD version.

The report, as covered by 9to5Mac, details that the major drop in the shipments of the iPhone X is result of longer replacement cycles in China. KGI notes that a large number of Chinese users are currently adhering to their existing phones for a long time, and specifically the notch on the top of the iPhone X’s Super Retina display has turned away some potential customers in the region. This is interesting as the notch enables facial recognition features, including Face ID, through the built-in TrueDepth Camera system.

According to KGI, Apple will ship around 18 million units of the iPhone X in the first quarter of the calendar year 2018 and nearly 13 million units in the second quarter. As the iPhone X is presumed to reach the end of life in the middle of this year, the company would sell around 62 million units total, significantly lower than the previous KGI forecast of 80 million units throughout this year. The projected weak iPhone X sales are not likely to have a negative impact on the overall growth of iPhone models in the market. KGI highlights that thanks to the growing sales of the iPhone 7 and iPhone 6s alongside the lower-tier phones in the iPhone family, including the cheapest, iPhone SE, Apple will see 0-5 percent growth in iPhone shipments for the first half of 2018 compared to a year ago.

The departure of the original iPhone X is likely to be filled well with the new versions that KGI’s Ming-Chi Kuo last year specified as 6.5-inch OLED and 6.1-inch LCD models. Both the new models are expected to have an iPhone X-lookalike design. However, the 6.1-inch LCD model is particularly expected to help Apple grow the shipments of iPhones by up to 10 percent in the entire 2018 calendar year. The LCD version is expected to come in the price range between $650 and $750 (approximately between Rs. 41,500-Rs. 47,900) and feature a 6.1-inch display.

As KGI uses the normal calendar, while Apple’s fiscal calendar is a quarter ahead of that, we can expect the mentioning of weakening iPhone X sales in the company’s guidance for fiscal Q2. Having said that, the fiscal Q1 results that are scheduled for February 1 would not show the negative impact to investors from what has so far been estimated.

The iPhone X is indeed a major creation for Apple, but several analysts already suggested that iPhone X sales in the fiscal first quarter would not be able to meet the original projection of 50 million and reach just 30 million units. Nonetheless, iPhone X sales still matter for Apple as its every single unit generates nearly twice the revenue of an iPhone 7, as reported by Reuters late last month.