Apple's OLED iPhone Production Ramp May Be Pushed Back Until Early Fall

Apple Inc. AAPL may have delayed mass production of the OLED iPhone to September or early October, according to Longbow analyst Shawn Harrison. However, Harrison said, “with greater confidence in FY18 growth in iPhone shipments, we are increasing our AAPL 12-month target price to $173.”

Highlights From The Report

• Harrison believes the delay is very fluid and noted “the new A11 processor, Touch ID and OLED screen” as factors for the delay. He also does not see it affecting iPhone 7s/7s+ production.
• Apple is expecting notable growth in iPhone shipments in 2018 and is currently supporting capacity additions by suppliers.
• While iPhone demand continues to lag, Harrison stated, “Contacts are supporting AAPL’s view that the nextgen iPhone rumors are affecting current demand. As an incentive, many retailers have been offering promotions and discounts on the iPhone 7.”

Bottom Line

“The launch is delayed,” Harrison concluded. “The volumes will be big for Christmas. Suppliers were told to initially not ramp as much as is typical because of semiconductor and sensor issues. Volumes should be up from last year and Apple gave suppliers capital to expand in order to meet higher demand.”

Longbow has a Buy rating and $152.76 price target on shares of Apple.

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