Apple iPhone production reports corroborate 'supercycle' thesis, analyst says

Investment bank Wedbush says that recent reports of iPhone production bumps are only the latest indication that the iPhone 12 "reality is meeting the initial hype."

In a note to investors seen by AppleInsider, lead analyst Daniel Ives cites a Nikkei Asian Review report from Tuesday that indicated that Apple plans to produce up to 96 million iPhone units in the first half of 2021.

That bump in production would represent a 30% year-over-year increase in smartphone models produced, and is also well ahead of current Wall Street expectations, Ives wrote.

The analyst said the recent reports echo Wedbush supply chain checks that suggested Apple could ship 230 million iPhone units in 2021. Ives believes that the current trajectory hints at a potential bull case, which could see Apple sell upwards of 240 million units, smashing the previous record of 231 million units shipped in 2015.

All of this is evidence that the proposed iPhone 12 "supercycle" is currently underway, Ives added. The investment bank is continuing to anticipate Apple shipping 80 million iPhone 12 and iPhone 12 Pro units in the initial launch period, with a number in the high-80 millions as a stretch goal.

Wedbush initially believed that 350 million out of 950 million iPhone units are currently in an upgrade opportunity window. With China remaining a central component of the proposed "super cycle," Ives said that the signs point toward an "unprecedented upgrade cycle for Apple with a major holiday season on the horizon."

The analyst is maintaining his 12-month price target of $160, based on a sum-of-the-parts valuation on Wedbush's 2022 AAPL fiscal year estimate. Ives arrives at that estimate by way of a 15x multiple on Services at $1.1 trillion and a 6.5x multiple on the rest of Apple's hardware business at $1.7 trillion.

A bull case, which Ives believes there is increasing evidence for, bumps that price target up to $200, based on raised 2022 estimates of $1.3 trillion for Services and $2.2 trillion for hardware.

Shares of AAPL are currently priced at $126.81 on the NASDAQ, up 4.13% in intraday trading.

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3 Comments

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randominternetperson 8 Years · 3101 comments

About 4 years ago

(Not blaming AI writers here, but) ugh "supercycle" is such an overused, unnecessary term. Some model years are more compelling than others, full stop.

bageljoey 18 Years · 1997 comments

randominternetperson said:

(Not blaming AI writers here, but) ugh "supercycle" is such an overused, unnecessary term. Some model years are more compelling than others, full stop.

It’s not just that the phone is particularly compelling but also the fact that there is a larger than average percentage who are “due” for a phone replacement as well. When those two “cycles” coincide you get a “super cycle.”

i don’t have a problem with that...

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tmay 11 Years · 6456 comments

randominternetperson said:

(Not blaming AI writers here, but) ugh "supercycle" is such an overused, unnecessary term. Some model years are more compelling than others, full stop.

If in fact that yearly unit sales climbs from something on the order of 180 m units to a projected 230 million units, that would certainly qualify as a "super cycle", the same as FY 2015 Q1 (calendar year 2014 Q4) with the release of the iPhone 6's.

https://www.zdnet.com/article/heres-an-interesting-chart-iphone-unit-sales-have-been-declining-steadily-for-five-years/

Still, Apple isn't providing unit sales data, so we have to rely on the best analysts, but it is conceivable that Apple sales are slowly increasing as the user base increases and as the average age of the iPhone has peaked.

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