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Apple iPhone 7 Demand Could Beat Expectations

Apple Inc. (NASDAQ:AAPL) iPhone 7 Demand

Date Published: 2016-08-04

Preface
On Monday September 5th, Digitimes reported that Apple has lifted production targets from its major suppliers in anticipation of greater iPhone 7 demand.

STORY
The newest incarnation of the Samsung Galaxy Note was hit by a growing wave of reported battery explosions when the device was used when it was plugged in. It took a while, but Samsung has done the right thing, which is to recall the product and make the needed fix.

The timing of the battery trouble could not have been better from Apple Inc. (NASDAQ:AAPL) which is set to announce its new iPhone 7 family on September 7th. While the technology world has its eyes on the ten year anniversary iPhone due out next year, this year's release is likely going to fall in the odd "middle ground" world of competent, but not too good to derail next year’s phone.

Apple Inc. (NASDAQ:AAPL) has seen iPhone sales fall for the first time ever this year so a "not so impressive" upgrade does leave the company in a slightly tenuous position. But, as luck would have it, an exploding battery in Samsung’s top product appears to be exactly what the doctor ordered. Here's what Steve Shen of Digitimes reported:

"
Apple reportedly has revised upward orders by 10% for parts and components needed for production of the new iPhone devices scheduled to be released on September 7, according to sources from the iPhone supply chain in Taiwan.

While the cynic in all of us may point to the Samsung battery blow up as the catalyst and therefore a short-term bump, that may be jumping the gun. It could be that Apple is simply finding greater demand for its flagship product due to low upgrades in the prior two quarters, with pent-up demand for the iPhone 7 family.

Now, if that sounds like an overly bullish view, it's actually exactly what Goldman Sachs reported several months ago. In fact, here is exactly what Goldie reported back in April:

"
Most importantly, our survey points to extremely strong pent-up demand for the iPhone 7 with 44% of respondents indicating that that they plan to buy the iPhone 7 in the fall.

Source: CMLviz

The reality may be a combination of both phenomena, but to simply place the increased demand at the feet of a competitors stumble is likely an overly simplified view of the overly bearish predilection that Wall Street has over Apple inc. (NASDAQ) and its iPhone 7. The author is long shares of Apple

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