Apple may reduce the release of the iPhone 13
Apple’s (AAPL) securities fell in price after the news that the company may reduce the production of the new iPhone 13 due to a shortage of components. As a result, buyers will receive 10 million fewer new smartphones than previously planned.
Apple shares, the most expensive company globally, lost about 1% and dropped to $141.5 at auction on Tuesday, October 12. On Wednesday, at preliminary trading on the NASDAQ stock exchange, the iPhone manufacturer’s securities fell by another 0.8% to $140.4.
Sales began amid reports that due to the global shortage of chips, Apple may reduce the production of the iPhone 13. According to Bloomberg, the company expects that in 2021 smartphones of this model will be released 10 million units less than expected.
Sources of the publication, Apple planned to produce 90 million iPhones of the new model in the last quarter of 2021. However, the total production volume will be smaller since Broadcom and Texas Instruments, which manufacture semiconductors, cannot cope with the supply of components for new smartphones.
A possible reduction in Apple’s production could also affect the shares of component suppliers. On Tuesday, Texas Instruments securities fell by 2.5% to $188.5, Broadcom shares – by 1.4% to $485.2, Skyworks Solutions – by 0.5% to $158.6.
On Wednesday, shares of Japan Display, which receives more than half of its revenue from Apple, fell by 5.6%, which was the most significant drop in two months. In addition, the shares of the South Korean manufacturer of electronic components LG Innotek fell by 6.2%.
Broadcom shares lose 0.9%, Texas Instruments – 0.4%. How the reduction in production will affect Apple shares A possible reduction in production plans for the iPhone 13 for 2021 may negatively affect Apple’s earnings in the key holiday quarter, writes Bloomberg. Bank of America expects that the tech giant’s sales volume will exceed forecasts by the end of September, but the issue restriction may significantly affect different results.
According to Bank of America analyst Vamsi Mohan, a likely reduction in production volumes may lead to sales not meeting forecasts in the fourth quarter. Still, the bank does not expect a substantial fall in the price of securities. According to analysts’ forecasts, quotations in the coming year may grow by almost 14% more – up to $ 160.
According to Jeff Fieldhack, director of research at Counterpoint Research, the current iPhone 13 sales results look better than the iPhone 12 for the same period last year. As a result, counterpoint Research did not change the estimate of iPhone 13 sales, which is 85-90 million for the fourth quarter.
Slight delays in production did not affect the optimistic outlook on Apple’s prospects, Morgan Stanley analyst Kathy Huberty said. However, she believes that investors should buy back any failures in Apple securities that occur due to concerns about the component supply chain.
According to the analyst, given the status of the market leader, problems with the supply chain of chips should cause Apple more minor damage than competitors.
Even if the company cannot meet the short-term demand of customers, the shortage of chips from competitors is likely to be even more significant, which will create an opportunity to increase market share, Huberty believes. Morgan Stanley has set a target price for Apple shares at $168 in the coming year. Analysts of the most significant investment companies also remain optimistic about stocks.
According to the Refinitiv consensus forecast, on average, they expect the price of securities to rise by 19% from current values — up to $168 per paper in the next 12 months. Thirty-four analysts recommend buying Apple shares, and nine recommend keeping them in a portfolio. No one gives recommendations for sale.
