Citi cuts Q1 iPhone production estimates on weak demand

Apple’s new iPhone XS and XS, Max are shown after it went on sale in the Apple Store in Tokyo’s Omotesando shopping district, Japan, September 21, 2018. REUTERS/Issei Kato

(Reuters) – Citi Research on Friday slashed its first-quarter production estimates for Apple Inc iPhones and almost halved the expectations of the most expensive iPhone XS Max, with other brokers in the lowering of the forecast amid reports of weak demand.

“The material to cut in our forecasts is driven by our vision that in 2018 the iPhone has entered a destocking phase, that does not bode well for the supply chain,” analyst William Yang wrote in a client note.

Citi said it expects the company to make 45 million iPhones for the quarter, a decrease of 50 million it forecast earlier. The cut was mainly due to the weak outlook for the iPhone XS Max, analyst William Yang said in a research note.

The brokerage reduced its forecast for the iPhone XS Max, which starts at $1,099, with 48 per cent.

According to a Wall Street Journal report in November, Apple cut production orders for all three iPhone models launched in September.

Shares in Apple’s Asian suppliers and assemblers slipped in November after a few component makers forecast weaker-than-expected sales, causing some market watchers to call the peak for the iPhones in a number of important markets.

The commission that the “sell” ratings on the iPhone assemblers Hon Hai Precision Industry Co Ltd and Foxconn Technology Co Ltd, said: see Hon Hai as particularly vulnerable, with a higher exposure to the new models.

In the beginning of December, TF International Securities analyst cut in the first quarter iPhone shipment estimate to 20 percent.

Reporting by Sonam Rai in Bengaluru; Editing by shailesh Kuber

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