iOS 7 teaser (iPhone 5c ad 007)

The entire tech world let out a simultaneous gasp when China Mobile launched its 4G network on Wednesday and made no mention of the iPhone. Up until then we had seen a flurry of reports and evidence suggesting that Apple had finally reached a deal with the carrier.

But clearly that’s not the case, and the big question now is: what’s the holdup? Well according to KGI Securities analyst Ming-Chi Kuo, the deal may have been slowed by unexpectedly weak demand for the iPhone 5c versus the iPhone 5s among China Mobile customers…

Here’s an excerpt from Kuo’s note to investors (via MacRumors):

“While previously we estimated that Apple originally planned the TD-LTE version would account for 30% of total iPhone 5C shipments, our latest survey indicates that demand for the TD-LTE iPhone 5C has declined dramatically due to 5S being far more popular than 5C among China Mobile subscribers. As such, we estimate iPhone 5C shipments of the TD-LTE version for China Mobile at 1.0-1.5mn units in 4Q13 and under 1.0mn units in 1Q14, well below Apple’s original production plan.

We believe this would necessitate a re-negotiation of the Apple-China Mobile deal and therefore defer its finalization.”

And here’s a breakdown of what Kuo thinks iPhone sales look like:

kuo_iphone_sales_4q13_1q14-1Rumors of an Apple-China Mobile deal have long been bouncing around the Internet, but they have picked up dramatically since the iPhone 5s and 5c debuted in September. Both handsets are compatible with the carrier’s odd TD-LTE network technology—a first for Apple.

The narrative then picked up steam with a handful of confident reports from The Wall Street Journal, and what appeared to be evidence of China Mobile holding a pre-sale and an impending launch. The carrier has maintained, though, that no such deal has been reached.

It’s not hard to see why everyone is anxious to see the two firms ink a deal. China Mobile is the largest carrier in the world, and a pact would give Apple access to over 700 million new customers. APPL has dropped nearly 20 points following Wednesday’s non-announcement.