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

Apple CEO Tim Cook.

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Apple CEO Tim Cook.
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Axios on HBO/YouTube

  • The well-respected analyst Ming-Chi Kuo believes the worst will soon be over for Apple’s iPhone slump.
  • In a note Monday, he says that analysts are too pessimistic about future iPhone sales and that shipments will decline by only 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 sold each quarter and then warned that it would miss its own revenue target in the holiday quarter by about 7%.

But in a note distributed to clients on Monday, one closely followed analyst predicted that the worst would be over soon.

The analyst, TF International Securities’ Ming-Chi Kuo, is known for being tapped into Apple’s Asian supply chain and accurately predicting new Apple products.

“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’s prediction includes a first-quarter decline in iPhone shipments of only about 14% year-over-year, better than the 29% decline in Apple’s holiday quarter.

Kuo blamed Apple’s slump on lower-than-expected demand for new models in China and emerging markets, a rationale echoing that which Apple gave in its letter to investors this month lowering its revenue expectations.

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 concluded, suggesting there were risks that Apple shipments could be lower and growth could be difficult to find even in 2020.