KGI: Strong IPhone 7 Plus Numbers, New Color Options Isn’t Enough

Well known Apple analyst Ming-Chi Kuo has now noted that iPhone7 Plus shipments are doing better than expected, though iPhone 7 shipments are much lower than the iPhone 6s.

Kuo says that one of the reasons behind the better numbers is due to the Galaxy Note 7’s battery recall. Samsung’s recall may have pushed some users to look elsewhere for a larger-screened phone.

Kuo also says that the dual-camera system is a feature well documented and that’ll help early shipments of the device.

In a survey conducted by KGI, the Jet Black color is the most popular color this time around, accounting for 30 to 35 percent of pre-orders worldwide. With 45 to 50 percent of pre-orders in China being this color. In terms of storage options, the 128GB model takes the icing on the cake.

When looking at numbers between the iPhone 7 and iPhone 7 Plus, Kuo claims that pre-order numbers are pretty neutral between the two. Again, due to the Galaxy Note 7 slump.

Kuo also says that the shortage surrounding the iPhone 7 and iPhone 7 Plus isn’t necessarily due to market demand. Again, with the Jet Black model being the most popular, it’s also the most challenging to manufacture, having a 60 to 70 percent yield rate. On top of this, both the iPhone 7 and iPhone 7 plus launched in 28 countries on launch day, as apposed to 12 last year.

Lastly, Kuo predicts that Apple will see a year-over-year decline in shipments of the iPhone 7 and iPhone 7 Plus, despite its strong performance. Even though KGI is increasing its estimate from 60-65 million to 70-75 million, iPhone 7 and iPhone 7 Plus shipments are expected to be lower than the iPhone 6s and iPhone 6s Plus shipments last year.

1. The iPhone 7 Plus shipment volume outlook is better than expected because of the recall of Samsung’s (KR) Galaxy Note 7 due to exploding batteries and positive reception of the iPhone 7 Plus’s dual-camera feature; we believe the recent share price gains for Apple and its supply chain members mean that these positives have already been priced in.
2. We forecast iPhone 7 2016 shipment volume will be lower than that for the iPhone 6S in 2015.
3. The initial iPhone 7 supply shortage was due to better-than-expected demand for the iPhone 7 Plus and undersupply of jet black casings caused by a poor production yield rate of 60-70%; overall demand is still weaker than that for the iPhone 6S.

Apple itself is predicting much lower numbers, opting not to share first weekend sales numbers for the first time for the iPhone.