- Apple's quarterly guidance signalled lower-than-expected growth and substantial iPhone 18 Pro price increases, prompting the downgrade.
- GF Securities analyst Jeff Pu downgraded Apple to Hold with anticipated iPhone 18 Pro price increases of $200-$300.
- iPhone 18 Pro demand faces risks from higher costs and iterative hardware upgrades.
- The iPhone 18 Pro and Pro Max are set for a September release, will help introduce Apple Intelligence and Siri AI, and face tougher market conditions.
- Apple CEO Tim Cook confirmed that memory-price inflation is hitting hardware gross margins and described it as a '100-year flood'.
- Other smartphone makers, including Samsung and Xiaomi, have already raised prices because of the cost pressure.
- Consumers in the premium category are shifting toward lower-end premium phones and last year’s models due to memory price increases.
GF Securities analyst Jeff Pu has downgraded Apple to "Hold" following the company's quarterly guidance, which indicated substantial price increases for the upcoming iPhone 18 Pro series. The anticipated price hike of $200-$300 is attributed to rising costs of TSMC silicon, DRAM, and NAND memory, exacerbated by increased demand for AI servers.456789
Apple CEO Tim Cook confirmed that these memory price increases, described as a "100-year flood," are affecting hardware margins across all product lines, including the iPhone. He noted that while some component costs are decreasing, the overall impact of higher silicon costs will be felt in the September quarter.
Other smartphone manufacturers, such as Samsung and Xiaomi, have also raised prices, indicating a broader trend in the market. Samsung's recent launches saw price increases of $100-$200 across various models, while Xiaomi announced similar hikes across its portfolio.161718
Despite the iPhone's status as Apple's primary growth driver, Pu highlights two significant challenges: the higher cost of the iPhone 18 Pro and the iterative nature of upgrades from previous models, which may limit consumer demand. He cautions that these factors, combined with harsh trading conditions, could dampen the anticipated success of the new iPhone models set to release in September.
“Apple CEO Tim Cook called the memory-price surge a “100-year flood” that is squeezing hardware gross margins across Mac, iPad, and iPhone lines; rivals Samsung and Xiaomi have already raised prices. GF Securities warns the Pro models' iterative upgrades and higher costs could dampen demand ahead of their September release.”
Forbes
