Samsung GS7 Launch Seen as Disappointing, Says Pacific Crest

Pacific Crest analyst John Vinh said overall GS7 sell-through was disappointed during the launch weekend. The news is seen as negative for suppliers:

ARM Holdings plc (NASDAQ: ARMH), Broadcom Ltd. (NASDAQ: AVGO), Cirrus Logic, Inc. (NASDAQ: CRUS), Integrated Device Technology (NASDAQ: IDTI), InvenSense (NYSE: INVN), Maxim Integrated Products (NASDAQ: MXIM), NXP Semiconductors (NASDAQ: NXPI), Qorvo (NASDAQ: QRVO), Skyworks Solutions (NASDAQ: SWKS), and Synaptics (NASDAQ: SYNA).

"Despite buy-one-get-one-free promotions by T-Mobile and AT&T, our carrier surveys indicate sell through of the Galaxy S7/S7 Edge was disappointing on launch weekend, with most carriers having ample inventory. While we believe most suppliers have made conservative assumptions on GS7 demand, we view our launch survey to be negative for the mobile supply chain," said Vinh.

"Our conversations with carrier stores indicate initial demand for the GS7/GS7 Edge has been weak during the launch weekend despite various promotions. AT&T and TMobile have 'Buy One, Get One' offers on new Galaxy flagship smartphones, and Sprint has '50% off on the second new Galaxy' offer. However, overall GS7 sales were still disappointing. Among the stores we surveyed, only a few reported stockouts for the GS7, and most stores had ample inventory on hand," continued the analyst.

Vinh added, "Inventory levels on a days-of-inventory (DOI) basis are already higher than levels not reached until two weeks after the launch of the GS6/GS6 Edge. We also observed significantly higher absolute inventory levels compared to levels we observed two weeks after the GS6 launch. Between the two new Galaxy phones, GS7 Edge has lower inventory as a result of relatively smaller shipments."

Pacific Crest believes companies most insulated are AVGO, IDTI, MXIM, NXPI, QCOM, QRVO and SWKS.

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