iPhone XR's Weak Demand Sees Q1 2019 Shipment Estimates Slashed: Ming-Chi Kuo

In a note to investors, TF International Securities analyst Ming-Chi Kuo has lowered his prediction for iPhone sales by 20 percent on account of weak demand for the iPhone XR. He expects Apple to ship between 38-42 million iPhones in the first quarter of 2019, a sizeable dip from his original estimate of 47-52 million. Apple shipped 52.2 million iPhones in the first quarter of 2018. 38 million shipments in Q1 2019 will account for a 27 percent year-on-year decline. When it comes to the iPhone XR in particular, Kuo has dropped his estimate from 20-25 million units in Q1 2019 to 15-20 million.

According to Kuo's estimates, Apple will ship between 205 and 210 million iPhone units in 2018. Based on that figure, he claims that 2019 will see a 10 percent decline in shipments (between 188 and 194 million). Kuo claims that the increase in orders for older iPhone models will not be able to "offset the decline of XR and XS series shipments because of the low season impact.”. Kuo also believes that sales will not pick up in the second half of 2019 due to the lack of any major upgrades. The note was shared by MacRumors.

Back in November, Apple slashed the price of the iPhone XR in Japan by offering subsidies to mobile-network operators in a bid to boost flagging sales. The iPhone XR was introduced along with the iPhone XS and iPhone XS Max in September, 2018. The budget-oriented model in Apple's lineup features an iPhone X-like display notch with Face ID built-in, the same A12 Bionic SoC found in the iPhone XS and iPhone XS Max, and a single 12-megapixel camera at the back. The smartphone starts at Rs. 76,900 in India.

There is a silver lining though. While shipments will be lower, Kuo maintains revenue from iPhone sales could still grow in 2019 due to higher average selling prices (ASP). In a note to TF International Securities, Kuo said: “ 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."