The iPhone 14 Pro and Max models are meant to be Apple’s best phones yet. From its splash, water, and dust resistant technology, right through to its 48-megapixel sensor, an ultrawide camera. But is it enough to save AAPL from the perils of economic chaos when it releases its fourth-quarter results next week?
Well, Cross believes it is. Even though AAPL raised the price of its devices in most countries, to combat volatile currencies, China was one of the few locations it did not raise prices in, and experts believe this was a tactical plan to maintain market share and demand.
This month the IDC released data that showed AAPL as being one of the only PC vendors to see positive year-over-year growth in the third quarter, as it was able to benefit from pent-up demand.
Consumer demand has remained muted though promotional activity from the likes of Apple and other players has helped soften the fall and reduce channel inventory by a couple weeks across the board," said Jitesh Ubrani, research manager for IDC's Mobility and Consumer Device Trackers.
"Supply has also reacted to the new lows by reducing orders with Apple being the only exception as their third quarter supply increased to make up for lost orders stemming from the lockdowns in China during the second quarter."
Cross’ views are supported somewhat by Capital.com analysts Daniela Hathorn thoughts.
Hathorn said: “Analysts are forecasting a 6% jump in revenue for Apple (AAPL) in the fourth quarter all whilst dealing with ongoing supply constraints. The company has shifted part of its production to China from India which has improved the issues.”
Hard to ignore the elephant in the room
But some analysts do believe it’s hard to ignore the elephant in the room of inflation.
On Thursday reports emerged that iPhone 14 was not having the best start, as Apple has had to halt production of the phone and is reassessing demand.
Blaming supply chain sources, it has been reported that Apple has reached out to at least one iPhone assembly partner to halt iPhone 14 Plus production and contacted two component suppliers to lower production by up to 90%
“The focus is now on consumers as there is growing concern that demand for consumer electronics will have weakened as soaring inflation and energy costs will have shrunk disposable incomes,” Hathorn adds.
“In fact, we’ve already seen Apple (AAPL) cut production on its newly launched iPhone 14 Plus as it re-evaluates the appetite and demand for its new product. The global smartphone market is expected to have shrunk by around 9% in the third quarter compared to a year earlier, with weak demand expected to continue in the next 6 to 12 months.”
Abhinav Davuluri, sector strategist at Morningstar echo’s Hathorn’s thoughts and said: “On the demand front, inflationary pressures are likely to curb consumer demand in the coming quarters, which could have a negative impact on Apple’s hardware sales.”
Whether AAPL can continue to maintain its position in the market, fighting against the ongoing storms, remains to be seen. But when it releases its fourth-quarter results next week, investors will be watching closely to see if it can remain king of tech giants.
