Apple Inc. (NASDAQ:AAPL) is already ramping up production of its future smart phone, tentatively titled the iPhone X. John Donovan and Steve Mullane of Bluefin say that the model, which is set to be the most expensive iPhone ever, is dominating production and component orders are not, thus far, being delayed.
As a result, according to BlueFin, the iPhone X is likely to be the next best seller out of Cupertino. An increasing share of total components are heading toward that production line. The iPhone X is competing with sibling iPhone 8 for space in Apple’s build capacity according to rumors. The Bluefin report was first relayed by Barron’s.
Ramping up the iPhone X
Unfortunately for hungry consumers, iPhone X will not hit its production targets until well after launch. Mullane and Donovan say that there will be about 13M units built by September. After launch, however, Apple Inc. (NASDAQ:AAPL) will greatly ramp up build numbers.
“iPhone X builds ramp in CQ4’17, projecting to represent 55% of the mix, and this ratio remains fairly steady through mid-2018,” according to the analysis by BlueFin.
Additionally, the firm says that components are flowing freely in Apple’s East Asia manufacturing hubs. The report states, “Importantly, we have yet to see any meaningful cancellation or even pushout of orders despite the reduced iPhone X projections, as it appears AAPL and the contract manufacturers are content to get in as many parts as possible as early as possible in order to satisfy what appears to be an insatiable demand for the OLED phone(s).”
To date Wall Street isn’t sure how Apple is going to deal with the release of its next iPhone. If rumors are right the firm will reveal three new models later on this year. The iPhone X is set to be the largest of the three and bring OLED screen tech to the iPhone for the first time in that model.
How does this affect Apple stock?
Apple Inc. stock has offered great returns through the first half of 2017 after a lackluster 2015-2016. Shares in the Cupertino firm have risen by more than 25 percent since the start of the year. If analysts are believed the firm’s shares are set to rise even higher. On Monday Macquarie Research raised its price target on Apple shares from $160 to $170.
Macquarie analyst Benjamin Schachter said that Apple stock would gain from international markets, particularly China. That means, according to Mr. Schachter, that Apple may be headed for a very strong iPhone sales cycle in the twelve months from the release of the firm’s next smart phone model.
BlueFin’s Donovan and Mullane believe that the release of the iPhone X is set to be a big driver of Apple Inc. (NASDAQ:AAPL) stock. If it launches at the rumored $1000+ price and dominates sales, ARPU rises. That number, Average Revenue per User, is key to Apple Inc. success as the firm simply runs out of people to sell its devices to. Hence predictions about iPhone X mix are key to the stock outlook.
On Tuesday morning shares in the firm were set to open higher. At time of writing shares stood at $146.42 in premarket trading. That’s up 0.76 percent on Monday’s close.
Update 12:18 EST: As BlueFin talks about component orders, it appears that some have escaped Apple’s supply chain. On Monday night images appeared on reddit showing the front and back panels of the device. There is no way to say for sure if the images are really from Apples release or not.
Additionally this is the first release of parts that are thought to be from one of the firm’s upcoming releases. There’s really not much information to be had from the photos. What seems to be clear, if the parts are real, is that the home button is gone. Hence speculation that the firm has built that feature into the screen seems to be confirmed.