Well-connected analyst Ming-Chi Kuo has penned a new research note highlighting some key takeaways from the 2018 iPhone and Apple Watch Series 4 launch weekend.
Most notably, Kuo says that Apple’s larger 6.5-inch iPhone XS Max is significantly outselling its smaller iPhone XS stablemate. Overall, the TF Securities analyst said that demand for the larger handset is “better than expected.”
As evidence of that, Kuo said that the iPhone XS Max is outselling the 5.8-inch OLED iPhone XS by three to four times.
Out of the available models, the analyst said that the mid-tier 256GB storage configuration has been the most popular. When it comes to color options, Kuo added that the new Gold finish and Space Gray are “significantly” more popular than the Silver finish.
“We are positive that XS Max shipments will grow steadily in 4Q18 thanks to demand from Asia market and the gift season,” Kuo said. Currently, TF Securities’ raised its estimates 5 to 10 percent for iPhone XS Max shipments in the year’s second half.
Additionally, the 512GB storage configuration could be subject to “serious” shortages due to the fact that Samsung is the only current supply chain partner that can ship NAND Flash storage reliably.
While the iPhone XS is seeing soft demand, the popularity of the iPhone XS Max and the mid-tier storage configuration could see Apple’s average selling price (ASP) to clock in at the $750 to $770 range this year.
Apple Watch Series 4
It wasn’t just new iPhones that launched over the weekend. Kuo believes that Apple’s new flagship wearable, the Apple Watch Series 4, is also seeing “much better than expected” demand.
TF Securities noted that since assembly partner Quanta’s is already at capacity, Apple Watch Series 4 supply can’t improve until Compal starts kicking mass production in November.
Kuo said that TF Securities has increased its Apple Watch shipment forecast in 2018 from 18 million units to 18.5 to 19.5 million units.
As far as upcoming devices, the TF Securities analyst still expects Apple’s upper mid-range iPhone XR handset to sell like hot cakes.
Kuo is forecasting that more customers will upgrade to the iPhone XR from older devices than they did last year with the iPhone 8 or iPhone 8 Plus. On the other hand, Apple’s primary LCD supply partners — JDI and LG Display — are reportedly seeing a display-related production bottleneck.
That bottleneck might explain the iPhone XR’s delayed launch. Earlier this year, Morgan Stanley analyst Katy Huberty indicated that Apple was running into backlight leakage issues on the iPhone XR’s Liquid Retina display.
But TF Securities expects Apple’s supply partners to resolve those production bottlenecks in mid to late October. Available supply could then “markedly improve,” with production ramping up to an estimated 35 to 40 million units within the next month.