Credit Suisse predicts smartphone production will plunge 19% this quarter

A couple of weeks after Apple announced that its holiday quarter earnings would be dramatically lower than expected, Credit Suisse believes this quarter may not bring much cheer either. The bank expects smartphone production to fall by a massive 19% this quarter …

Author Ad Placeholder
Will only appear on redesign env.

In an investors note seen by Business Insider, Credit Suisse analysts say that smartphone production will this quarter drop to its lowest level since 2013.

In a note to clients, Credit Suisse published estimates showing that global smartphone production is in free-fall, and the bank’s analysts warned that the “bottom not yet in sight.”

Credit Suisse revised down its smartphone production forecast for the final three months of 2018, predicting it will fall by 3% quarter-on-quarter to 357 million units. It said first-quarter output will fall 19% to 289 million units […]

If Credit Suisse’s forecasts prove accurate, it means that first-quarter smartphone production will have fallen for five consecutive years. “It is too early to say whether this news is already fully discounted in share prices, or will continue to have an impact,” it added.

China has been the primary source of Apple’s troubles, the company stating that falling sales there were responsible for almost all of the gap between expectation and reality in holiday quarter sales. Smartphone shipments fell significantly there for all brands, and WeChat means that Apple’s ecosystem is far less valuable there.

Analysts have been slashing their target prices for AAPL in response to the company’s guidance cut, as the stock fell to 30% below its October peak. Questions are being asked about whether Apple has pushed the average selling price to breaking point.

Some analysts are more optimistic, however: one who predicted three reasons Apple might be heading into difficult times says that there are also three reasons for hope.

  • The next iPhone hardware revision should sell better in China, simply by virtue of being new (and the implication of it being easy to switch away from iOS is that it’s easy to switch back).
  • Customers still prefer Apple’s flagship iPhones, no matter how expensive they are.
  • Headwinds like currency and battery replacement programs will go away, and phones, thanks to their centrality in people’s lives as well as the greater likelihood of harm, will always have a faster replacement cycle than PCs.

Apple itself has been placing increasing emphasis on Services, CEO Tim Cook saying that more are on the way in 2019, and has even proved willing to sacrifice hardware sales in order to boost demand for things like Apple Music and its long-anticipated streaming video service.

We’ll find out how Apple’s holiday quarter worked out when it announces its results on January 29, but we’ll have to wait until later in the year to learn whether the pessimism about smartphone production levels in the current quarter is justified.

Photo: Shutterstock

Check out 9to5Mac on YouTube for more Apple news:

FTC: We use income earning auto affiliate links. More.

You’re reading 9to5Mac — experts who break news about Apple and its surrounding ecosystem, day after day. Be sure to check out our homepage for all the latest news, and follow 9to5Mac on Twitter, Facebook, and LinkedIn to stay in the loop. Don’t know where to start? Check out our exclusive stories, reviews, how-tos, and subscribe to our YouTube channel



Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!

Ben Lovejoy's favorite gear