Citi cuts Q1 iPhone pro­duc­tion es­ti­mates on weak de­mand

Business a.m. - - TECHNOLOGY & INNOVATION -

CITI RE­SEARCH ON Fri­day slashed its first-quar­ter pro­duc­tion es­ti­mates for Ap­ple Inc’s iPhones and nearly halved ex­pec­ta­tions on the costli­est iPhone XS Max, join­ing other bro­ker­ages in low­er­ing fore­cast amid re­ports of weak de­mand.

“The ma­te­rial cut in our fore­casts is driven by our view that 2018 iPhone is en­ter­ing a de­stock­ing phase, which does not bode well for the sup­ply chain,” an­a­lyst Wil­liam Yang wrote in a client note.

Citi said it ex­pects the com­pany to make 45 mil­lion iPhones for the quar­ter, down from 50 mil­lion it fore­cast ear­lier. The cut was mainly due to weak out­look for the iPhone XS Max, an­a­lyst Wil­liam Yang said in a re­search note.

The bro­ker­age low­ered its fore­cast for the iPhone XS Max, which starts at $1,099, by 48 per­cent.

Ac­cord­ing to a Wall Street Jour­nal re­port in Novem­ber, Ap­ple cut pro­duc­tion or­ders for all three iPhone mod­els launched in Septem­ber.

Shares in Ap­ple’s Asian sup­pli­ers and as­sem­blers slid in Novem­ber after sev­eral com­po­nent mak­ers fore­cast weaker-than-ex­pected sales, lead­ing some mar­ket watch­ers to call the peak for iPhones in sev­eral key mar­kets.

The bro­ker­age that has “sell” rat­ings on iPhone as­sem­blers Hon Hai Pre­ci­sion In­dus­try Co Ltd and Fox­conn Tech­nol­ogy Co Ltd, said it sees Hon Hai as par­tic­u­larly vul­ner­a­ble, with higher ex­po­sure to the new mod­els.

In early De­cem­ber, TF In­ter­na­tional Se­cu­ri­ties an­a­lyst cut first-quar­ter iPhone ship­ment es­ti­mate by 20 per­cent.

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