The worst may be over for Apple’s iPhone slump, Ming-Chi Kuo predicts (AAPL)

Tim Cook

  • Well-respected analyst Ming-Chi Kuo believes the worst will soon be over for Apple’s iPhone slump.
  • He believes that analysts are too pessimistic about future iPhone sales, and that shipments will only decline about 14% annually in the first quarter of the year, better than the 29% decline in Apple’s holiday quarter. 

There has been a lot of investor worry about Apple’s iPhone sales, after the company said it would no longer disclose the number of units it sold, then warned that it would miss its own revenue target by about 7%.

But one closely-followed analyst, TF International Securities’ Ming-Chi Kuo, said that the worst will be over soon in a note distributed to clients on Monday. 

Kuo is well-known for being tapped into Apple’s Asian supply chain and predicting new Apple products before they are released. 

“The current market consensus on 2019 iPhone shipments (160–180mn units) is much lower than our estimation and we believe the share prices of Apple and most iPhone suppliers are generally priced in the negative,” Kuo wrote in the note seen by Business Insider. “We maintain our forecast of 188–192mn units for 2019 iPhone shipments.”

Kuo places the blame on Apple’s slump because “the demand for new models in China and emerging markets is lower than expected,” which is similar to Apple’s reasoning for its shortfall in a letter to investors. 

And if Apple’s trade-in programs are successful and the escalating trade war between the United States and China doesn’t take a bad turn, Kuo sees iPhone shipments this fall to be flat year-over-year, avoiding another declining cycle. 

Kuo focuses his research on companies that sell parts and services to Apple, and he recommends Apple suppliers with “good cash yield” including Luxshare ICT, Sunway, and Lens. 

“We think the Apple and iPhone supply chain still has uncertainties,” Kuo concludes, suggesting there are risks that Apple shipments could be lower and growth could be difficult to find even in 2020. 

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