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Why This Apple Analyst Sees iPhone Production Cut As Nothing But A ‘Speed Bump’ In Multi-Year ‘Supercycle’

Posted October 13, 2021
Shivdeep Dhaliwal

Wedbush analyst Daniel Ives said the iPhone story is “unchanged” despite chip shortage leading to expectations of a holiday iPhone crunch. 

The Apple Analyst: 

Ives has an “outperform” rating on the Tim Cook-led company.

The Apple Thesis: 

The Wedbush analyst pointed to the “robust” demand globally for iPhones with China and the United States being standouts.

“Apple will be running into a 5 million+ iPhone 13 unit shortage for holiday season if consumer demand keeps up at this pace with those smartphones now shipping in the FY1Q/December quarter with low inventory levels globally.”

“Taking a step back, 5 million to 10 million units moving out of the December quarter into the March quarter due to well understood supply chain issues is not a worry for us,” wrote Ives.

The analyst pointed out that the shortage is in fact a testament to a “stronger demand trajectory” than the Street had been anticipating.

Why It Matters: 

On Tuesday, Bloomberg reported that Apple would cut production of its iPhone 13 smartphones for 2021 by 10 million units due to chip shortage.

Ives said that the news surrounding chip shortage affecting iPhone manufacturing is “nothing more than a speed bump on a multi-year supercycle iPhone 12/13 that continues to play out.”

The analyst noted that the initial launch numbers of the iPhone 12 were nearly 80 million units and said that the multi-year iPhone 12/13 supercycle continues to play out. 

He said that ASPs [Average Selling Prices] continued to be very positive on both the Pro and the Pro Max models and as of today 250 million of 975 million iPhones worldwide are not upgrading in 3.5 years.

“Any overreaction to this news we would be strong buyers as the FY22 growth story for Cupertino remains unchanged, its just a timing issue of iPhone units shipping to customers with supply chain constraints rampant across Asia.”

Previously, Cook had acknowledged that the Cupertino, California-based tech giant is affected by “some shortages.”

Price Action: 

On Tuesday, Apple shares fell 1.3% lower at $139.63 in the after-hours session after ending the regular session almost 0.9% lower at $141.51.

Originally Posted on October 13, 2021 – Why This Apple Analyst Sees iPhone Production Cut As Nothing But A ‘Speed Bump’ In Multi-Year ‘Supercycle’

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