Famed Apple Analyst Ming-Chi Kuo Slashes Apple’s Q1 iPhone Shipment Estimates

One of the world’s top Apple analysts has reduced his first-quarter iPhone sales estimates, primarily because of lower demand for the iPhone XR.

A new report from Mac Rumors explains that famed Apple analyst Ming-Chi Kuo of TF Securities announced in a new investor note that he was cutting iPhone shipment estimates for the first quarter of 2019, again, due in part to lower-than-expected iPhone XR demand.

He said that the “increase in orders of legacy iPhone models cannot offset the decline of XR and XS series shipments because of the low season impact.”

Kuo has estimated sales of 38-42 million units in Q1 2019, which is nearly 10 million short of the sales in the same quarter last year. Kuo’s forecasts for iPhone sales in 2019 are lower than the estimates of most other analysts, who predict that shipments will reach 200 million units. Kuo believes that total iPhone shipments for 2018 would be nearly 210 million and he believes this figure will be reduced by nearly 5 to 10 percent next year:

We have reduced our 1Q19 iPhone shipment estimation by 20% to 38–42mn units (vs. our previous forecast of 47–52mn): We cut the 1Q19 iPhone shipment estimation again for the following reasons. (1) Lower-than-expected XR demand. We have reduced our 1Q19 XR shipment estimation to 15–20mn units vs. our previous forecast of 20–25mn units.

The report, which sent Apple shares falling 2% Friday morning, said the decline in full-year shipments for 2019 would come as a result of newer models’ lower-than-forecast replacement demand and “low season impacts” for the first half of the year. Painting a grimmer picture, in the latter half of the year, “new iPhone models may not grow” due to “no major upgrades.”

Despite Kuo’s shipment estimate cuts, he says that it’s not all bad news for the Cupertino company. Apple has been able to bolster its financial performance by selling higher-priced iPhones, so even with fewer sales, the company should still be able to protect its margins and profitability:

We believe that the iPhone ASP could at least keep growing YoY until 3Q19, and it will offset the YoY shipment decline. However, most suppliers will face growth challenges due to iPhone shipment decline. We believe that specific suppliers can grow, thanks to the component price increase or the ability to obtain new orders, but the visibility of the beneficiary list will not be clear until 1Q19 because some spec and order allocations of 2H19 new iPhone models are not confirmed yet.

Apple’s iPhone shipments missed Wall Street estimates last quarter. The Cupertino company also said in November that it will stop reporting individual sales numbers for the iPhone.

In related news, Apple warned that banning iPhones in China could have serious consequences for both the company and the local economy, with the Cupertino-based tech giant reminding that it created 5 million jobs locally.