When a company the size of Apple Inc. (Nasdaq: AAPL) has a product as massively popular as the iPhone, sales data can have a wide-reaching impact in the market. Apple has an entire family of iPhone suppliers that depend on their critical relationships with Apple, and mixed early market feedback on the iPhone 8 and iPhone X has suppliers on edge heading into the end of the year.
According to a new carrier survey conducted by KeyBanc, iPhone X supply remains constrained and iPhone 8 inventories are rising. KeyBanc analyst John Vinh says this dynamic doesn’t bode well for iPhone suppliers while they await more clarity on true iPhone X demand.
Vinh says many stores remain sold out of iPhone X inventory, while others stores are receiving between five and 10 iPhone X devices per shipment. The shipments have been inconsistent, and new devices immediately fly off the shelves. Unfortunately for investors, there’s no good way to assess real market demand with such short supply.
Vinh says demand for the Apple iPhone 8 has been on the strong side, but inventory levels are on the rise, recently crossing above two days of inventory for the first time.
Vinh says current iPhone 8 inventory levels are slightly higher than he would like to see given current demand for the device. “We view current normalized inventory levels to represent modest risk of an inventory correction” he says.
KeyBanc also reports solid inventory levels for the Samsung Electronic Galaxy S8 ahead of the 2019 launch of the GS9.
For now, Vinh says iPhone suppliers will likely have limited upside.
“We expect supply chain stocks to remain range bound until we can better assess true demand for the iPhone X,” he says.
KeyBanc recommends investors focus on just three Apple iPhone suppliers heading into 2018 – Broadcom (AVGO), Cirrus Logic (CRUS) and Skyworks Solutions (SWKS). The firm estimates…
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