Apple Inc. is being very ambitious heading into the release of the next iPhone, but some of the firm’s ambition may be working against it this time around. The firm’s new iPhone, popularly, and tenuously, dubbed the iPhone 8 will come with an OLED screen according to reports. Unfortunately, that OLED screen may not be coming fast enough.
That’s the thesis outlined by Jim Suva of Citigroup in his latest report on the Cupertino company. In his view Apple is going to have major problems supplying enough screens. That means the firm will struggle to keep up with demand for the premium smartphone. This, then, will have a massive knock on effect on the firm’s earnings.
iPhone 8 OLED screen slows production
Mr. Suva reported on Wednesday morning that Tim Cook’s firm would struggle to meet demand for the OLED screen. This will, if rumors are true, be the first time the firm has included tech like that in its smartphones. The production facilities are still aiming to ramp up in order to meet the 40 million plus units set to be demanded this year.
If the rumor is right, Apple Inc. is going to release the iPhone 8 to thunderous applause, and very long queues. Ming-Chi Kuo of KGI Securites says the mix of iPhone demand in Q4 will lean about 50 percent toward the iPhone 8.
That could mean big trouble for Apple, and could shake the firm’s shares if it comes to pass. Because of the nature of iPhone supply chain rumors, now is not the time to bet. The rumors have been more wrong than right in recent years. That’s particularly true when it comes to talk of delays.
Don’t believe the Apple Inc. stock rumors
If you’re a follower of the “buy the rumor, sell the news” line of thinking on Wall Street, you may see this as a way to do just the opposite. That’s exactly what Mr. Suva seems to be recommending in his report.
As estimates for the firm’s September quarter fall, he sees an attractive entry point for the stock being reached.
OLED delays could be enough to create an even more attractive buying opportunity. That window would come after Apple Inc. releases its numbers for the quarter through the end of December. If the firm isn’t able to supply demand for its top-level smartphone, revenue is likely to come in lower than expected.
We have, however, seen rumors almost every single year of Apple delaying the iPhone release due to tech problems. It’s not like it hasn’t come to pass before. It’s much more common, though, for early-days supply chain rumors to be bandied about as fact.
Still, Mr. Suva has a $160 price target on Apple stock and a Buy rating. That’s an impressive increase in value forecast for the firm. On Wednesday morning the firm’s shares were set to open at around $144. Apple stock fell by more than 7 percent over the last month as the firm was squeezed in a broader tech sell-off.