iPhone Demand Versus Smartphone Demand

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BofA Discounts Talk of Waning iPhone Demand

31 MARCH 2022 - Conflicting stories on smartphones mid-week - one specific to iPhone, and one about smartphones in general. On the iPhone-specific side, CNBC had analysts with Bank of America balking at talk of reduced orders for iPhone SE. Nikkei ran a report earlier this week saying that Apple had reduced orders for its most budget-friendly phone due to a lack of demand. That report’s sentiment was seconded by TF International analyst Ming-Chi Kuo. 

BofA’s not buying it. CNBC has the bank’s analysts saying in a note:

While these articles might lead some investors to think there is risk to demand, we believe demand for iPhones remains strong based on our analysis of iPhone trade-in prices…

The firm points out that trade-in prices went down after the launch of iPhone SE. Max trade-in for an iPhone 12 Pro before the SE release was $700. Post release, that max dropped down to $650. CNBC has the analysts arguing that “this shows demand is still strong since Apple doesn’t need to pay as much to convince people to trade in older iPhones for new models.” 

Also, a BofA global survey from January showed 25% of respondents rocking an iPhone 8 or earlier. Quoting their note again:

We see this as an opportunity for driving a replacement cycle… Apple could be targeting to upgrade these users to a newer iPhone which could be a reason Apple still accepts the iPhone 6 and 6 Plus models for trade-in in China but not in the U.S. and UK.

Bank of America has a “Buy” rating on Apple shares. The firm’s price target on the shares is $215. 

TSMC Chairman Warns of Waning CE Interest

When the Nikkei story hit earlier this week, I wondered whether concerns over inflation and war may weigh more than a new iPhone right now. A piece from MacRumors supposes something similar, thanks to comments from TSMC Chairman Mark Liu. 

The piece has Mr. Liu indicating that “Demand for consumer electronics like smartphones and PCs is slowing due to continued geopolitical uncertainties and new COVID-related lockdowns in China…” Speaking at the Taiwan Semiconductor Industry Association, Apple’s chip partner also warned about the rising cost to chipmakers, a pressure that “could eventually be passed on to consumers…”