Apple (AAPL) iPhone X Preorder Demand May Surpass 40-50M Units - KGI

September 25, 2017 8:57 AM EDT
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In a note to clients this morning KGI's well-regarded analyst Ming-Chi Kuo said they expect Apple (NASDAQ: AAPL) iPhone X preorder demand may have surpassed 40-50 million units.

Kuo commented, "iPhone X is seen as the first model refresh since iPhone 6 from 2014, offering a revamped form factor design. We think Apple’s (US) core fans and some iPhone 6 and 6s users are willing to pay a hefty price for this upgraded device. As regards Face ID, we’re now convinced that TrueDepth camera (3D sensing) creates a far stronger user experience than those of Apple’s rivals. We also think that if Apple can effectively communicate this message of an exceptional user experience before preorders begin and prior to launch, it will go a long way to addressing some concerns that may hold back potential demand, thereby boosting preorder momentum."

The analyst believes the TrueDepth camera may be the main production bottleneck of a iPhone X ramp. "The 3D sensing (TrueDepth camera) on iPhone X is composed of a structured-light system, time-of- flight system and a front-facing camera, which represents a far more complex structure than those of rivals. It will therefore be harder to achieve mass production. While we project iPhone X will see output ramp up meaningfully in mid/ late October, tight supply may only start to ease in 1H18F due to strong demand."

Kuo sees shipments of iPhone X components likely to ramp up in October. "We believe some component suppliers have pulled in iPhone 8 from 4Q17 to 3Q17 so that more resources can be allocated to iPhone X in 4Q17 to meet robust demand," the analyst stated.

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