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​Goldman Sachs Slashed iPhone sales estimates Q1 and Q2
April 02, 2018

The investment bank said for quarter-ended March, it is trimming its iPhone sales expectations by 1.7 million units. It now expects sales of 53 million units in the calendar first quarter. For the three months to June, Goldman said it expects sales of 40.3 million units, a reduction of 3.2 million from its previous forecast. Etnews reports that Apple is planning to produce about 55 million units of two OLED iPhones to be released this fall. This amount is almost half of production goal of iPhone X (100 million units), which is their previous OLED iPhone model. If true the change would be a drastic modification to Apple’s business strategy that has South Korean companies in the OLED supply chain worried. According to multiple reports by suppliers, Apple plans to release 5.85” and a 6.35” smartphone with a combined production of 50m- 55m units, which is ½ of the original iPhone X forecast. Lack of iPhone X sales directly affected South Korean electronic part industries. Utilization rates of facilities of Samsung Display, dropped sharply due to lack of sales. Other manufacturers that produce other parts and materials such as RFPCB (Rigid Flexible Printed Circuit Board) and OLED materials were also affected by the slowdown.
 
South Korean businesses were expecting that number of orders will start to rise again as new OLED iPhones are expected to be released this fall. They still had hopes of recovering their performance especially but now it seems unlikely as Apple is planning to produce about 55 million units of OLED iPhones and about 150 million units of LCD. If Apple increases production volume of LCD iPhones, JDI and Sharp are going to benefit. It is likely that South Korean electronic part industries will have difficult times in recovering their performance. In case of one company, it is facing significant sales reductions as 80% of its sales had come from Apple. As a result, it is carrying out unpaid leaves on entire employees. In case of another company, it is at a point where it cannot operate its facilities in Vietnam that were extended due to high expectations from Apple’s supplies. Samsung Display and LG Display, which also had high hopes on Apple’s orders, are also slowing down their new investments and are affecting its partners as a result. South Korean electronic part industries are worried that they will face huge blow from Apple for the second time.
 
Goldman Sachs said in a note late Tuesday that Apple has reduced its iPhone shipment forecast by 2.5 percent to 217.3 million units for Apple's fiscal year, which ends on September 30, 2018. It also cut its iPhone shipment expectations for fiscal 2019 and 2020 by 4 percent and 1.8 percent respectively. Goldman Sachs said that its expectations of the average selling price (ASP) of Apple products is now 2 percent below market consensus for the June quarter. As a result of its reduction in iPhone shipments, Goldman also reduced its revenue forecasts for this fiscal year ending September by 2.4 percent to $256.6 billion. For the 2019 fiscal year, Goldman cut its revenue forecast by 2.7 percent to $272.5 billion. The investment bank also revised downwards the rate at which it expects people to replace their devices, even in China. Despite declining replacement rates, Goldman said the number of people with iPhones will continue to grow and currently stands at 631 million units. The Wall Street firm also said it expects the upcoming OLED phone will start at $949 compared with the $999 starting-price tag of the iPhone X.