Why This Apple Analyst Sees Upside To iPhone Shipments In The Coming Months

Even as Apple, Inc. AAPL grapples with production issues stemming from the situation in China, an analyst said iPhone sales will likely beat estimates for the next two quarters combined.

Mixed Signals On December Quarter: Lead times – the time between the placement of the order and the actual delivery of the product, for the iPhone 14 Pro/Pro Max models was 4.3 weeks as on the week of Dec. 9, Gene Munster, co-founder of Loup Funds said. This compares to 0.9 weeks for the iPhone 13 Pro model for the week of Dec. 12 last year, he noted.

The three times year-over-year increase in lead times is due to a combination of tight supply, driven by China COVID-19 restrictions, and favorable demand for the Pro models, he added.

Apple’s chip supplier Taiwan Semiconductor Manufacturing Company Limited TSM, which builds the tech giant’s A16 chip used in iPhone 14 Pro models, is on track to report 47% revenue growth for the December quarter, the venture capitalist noted. This is unchanged from the 48% growth in the September quarter, when Apple reported iPhone revenue growth of 10% year-over-year, he noted.

That does not mean Apple’s December quarter iPhone revenue growth would be 10% due to the lag between when TSMC sells to Apple and when the chips are used in the iPhones and the product is sold, Munster said.

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Upside Likely In Coming Months: Munster noted two data points that are negative for the December quarter iPhone demand. First is the company’s preannouncement indicating soft iPhone Pro model sales, and second is the longer than normal lead times late in the quarter pointing to softness.

TSMC’s strong October and November sales coming in measurably better, however, suggests that even with the lags, the December quarter is poised for an upside, the analyst said.

“Adding these three forces together, it’s unclear if the iPhone will exceed December estimates,” Munster said.

Setting aside the timing of iPhone assembly and combining estimates for the December and March periods, the analyst expects an upside to iPhone sales in the coming months.

Apple closed Friday’s session down 0.34% at $142.16, according to Benzinga Pro data.

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