KGI: no iPhone SE refresh in Spring 2017

By , Nov 5, 2016

iPhone SE

KGI Securities analyst Ming-Chi Kuo is predicting iPhone sales will drop in the first quarter of 2017 because he is not expecting a refreshed iPhone SE model that could perhaps reinvigorate demand during the slow post-holiday quarter.

Kuo’s note to investors Friday says Apple’s been putting pressure on component makers to reduce prices in order to protect its high gross margins that are the envy of the industry.

On a recent conference call with analysts, Apple indeed provided lower-than-expected gross margin guidance between 38 percent and 38.5 percent for the holiday quarter versus Wall Street consensus of at leasts 39 percent.

Kuo also isn’t expecting Apple to refresh the iPhone SE in Spring 2017 because the company wants to avoid cannibalization of the latest-generation iPhone 7. That could be true, but don’t forget that Apple is not afraid to cannibalize its own products. Besides, if they really wanted to minimize handset cannibalization Apple wouldn’t have released the iPhone SE in the first place.

iPhone 7 bill of materials costs are higher than previous versions, according to IHS Markit, which probably explains why Apple is not expecting its gross margins to improve during the current quarter.

iPhone 7 BOM IHS Markit table 001
32GB iPhone 7 carries an IHS-estimated $219.80 in bill of materials costs.

“Total BOM costs for the iPhone 7 are more in line with what we have seen in teardowns of recent flagship phones from Apple’s main competitor, Samsung, in that the costs are higher than in previous iPhone teardown analyses,” said IHS’s Andrew Rassweiler.

“All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past.”

The iPhone SE launched on March 31, 2016.

Kuo’s report doesn’t look beyond Spring 2017, meaning it’s possible for Apple to refresh the SE alongside other iPhones in the Fall of 2017. The KGI analyst cautions that milking the supply chain for all it’s worth won’t affect major suppliers such as Samsung and semiconductor maker TSMC.

Samsung due to its sheer size has bargaining power to fight the pricing pressure and TSMC’s production capacity was pre-booked, meaning switching these two suppliers would be very costly for the Cupertino firm.

iPhone SE iFixit Teardown

Samsung actually might be able to raise prices, Kuo predicted.

Because 3GB DRAM and 3D NAND flash “will likely remain in short supply in the holiday quarter, Samsung  “is unlikely to surrender to the pressure and may even raise its product prices,” reads Kuo’s analysis.

Suppliers with weak bargaining power—and a majority of iPhone suppliers fall into the category—may have no choice but bow to Apple’s demands and cut prices of components at the expense of their own already thin gross margins.

All in all, Kuo is forecasting iPhone shipments of 40-50 million units for the holiday quarter, down year-over-year from 51.2 million units. Total iPhone shipment in the second quarter of 2017 are predicted to hit 35-40 million units, down from 40.4 million units at the same time last year.

Assuming Kuo’s report proves true, it’s somewhat disappointing that the iPhone SE won’t be refreshed in a few months (though, as I said, Apple could delay the refresh to put the iPhone SE on the same fall release schedule as other iPhone models).

It’s worth keeping in mind that the four-inch form factor is particularly popular with approximately one-quarter of iPhone buyers. The iPhone SE does a lot of things right by packing in the iPhone 6s-class hardware (sans 3D Touch) in the beloved iPhone 5s design. It’s one of the best phones Apple’s ever made and I don’t want to see it lingering without a refresh for years.

In your view, should the iPhone SE also be on an annual refresh cycle like other iPhone models?

Source: AppleInsider

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  • Inseltraeumer

    “In your view, should the iPhone SE also be on an annual refresh cycle like other iPhone models?”

    They should just offer similar specs and design in three screen sizes

    • czbird

      Nope. I love the SE design. Wish they maintain it.

  • Chloe Elizabeth Wade

    Imo iPhone SE and the 4.7inch iPhone shouldn’t be a thing there should only be plus or bigger I mean to me 5.5 inch is the bare minimum in 2016

    • John Smith

      As a guy who works in mobile sales, I have no idea where you’re getting this idea from. For every 4.7 inch and 5.5 inch iPhone we sell we sell 3 iPhone SE’s, and their main factor, as far as guests have told me, is that it is the same size as the 5S. I have a 4.7 inch iPhone, and in my opinion, 5.5 inch is too big. Everyone has their own preference, but we shouldn’t have to settle for something uncomfortable so the phablet could be the main starting point.

      • Chloe Elizabeth Wade

        I don’t get why you’d still buy a small device especially when the smaller iPhones don’t get the gimmicks like dual camera but the plus do also the phablet form factor is better for me bc I play a lot of games and watch a lot of vidoes

      • John Smith

        The reason is comfort level. If you look at the iPhone 5 ads, the reason they kept the same width but increased the height is because any larger and the average user won’t be comfortable using their device with one hand. Why should I have to settle for a larger screen, depending on me using two hands to type, just because there are people who have larger hands and can type with just one hand? Had the iPhone SE had 3D Touch I would’ve ditched my 6S for it.

        When we first got the iPhone 7’s in stock, there were a bunch of people complaining about the fact that the 4.7 inch didn’t have the dual camera. They hated the idea of owning something that they can’t comfortably use, but boy did they want the dual camera. I was even tempted at one point (I kept the live display in my pocket for a few weeks until we were able to put it up), and I decided against it because of how uncomfortable it was to use. It’s the same as you deciding against a smaller screen.

        Here’s to hoping the next three devices Apple releases are the iPhone 4″, iPhone 4.7″, and iPhone 5.5″, all together with the same features. Their sales will skyrocket if all fields are covered.

      • leart
      • Julio Hernandez

        Your opinions are

      • czbird

        I have SE and iPad mini. Don’t see why would I want to carry around a phablet. Very uncomfortable, especially for men – we don’t have purses, u know…

      • Here in Europe every guy has a man purse. Except England.

      • czbird

        Maybe you mean wallet…? I’m European as well and men around me definitely do not carry around purses 🙂

      • Maybe it’s just Eastern Europe then.

      • Juschan

        hahaha never Seen a man carrying a purse definetly not everywhere in Europe

      • leart

        yeah.. it’s your opinion, 5.5 inch it’s perfect for nowadays
        till last year i used 2 small iPhones, 4/4s and didn’t realized what I was missing .
        now daily i use a iphone 6s plus and a iphone 5, always loved small phones but once you use those large phones can’t go back…
        people should not blind theirsefs with small screen phones

        https://uploads.disquscdn.com/images/fa2a3407b9298b9eee40078c08b2fa090f9f1483364249477a688ff19dc7edc8.jpg

      • czbird

        Oh yes you can go back. I did 🙂

    • czbird

      Nonsense. I don’t want big screen. Been there. And happily returned to SE.

      • Tom Mermul

        Me too. Went from 5 to 6, 6plus and now back to se. 6 plus was terrible

      • Paul John Schoenmaeckers

        I went from iPhone 6 to SE don’t regret it at all.

      • Chloe Elizabeth Wade

        Tbh I had iPhone 5 until last year I upgraded to 6s plus it was the best thing I ever did I always thought iPhones were too small but didn’t want to buy an Android I was so happy when they got bigger the bigger screen is just better for my use case plus OIS 4k video 3d touch 5mp selfies and bigger battery is cool

      • czbird

        As you said, that’s your use case. Other ppl have different. So, claiming that 5.5 is a bare minimum in 2016 is simply not valid.

      • Chloe Elizabeth Wade

        I said bare minimum FOR ME

      • czbird

        Then it’s just fine 🙂

  • Charlie

    I am surprised Apple never took legal action against this guy as he is pretty accurate every time

    • Lit

      He’s accurate? lol Nope. He (or she?) makes bogus rumors early on. And then as it gets closer and closer to release, the rumors are revised to what other people have already said. Trust me, follow the rumors from early stages and see how it changes.

      • Icisz

        Your absolutely right. He is an analyst who extrapolates information based on supply chain movements and insider information that may or may not be accurate, and inevitably becomes more accurate as time moves on. Parts flowing at certain volumes for specific demand curves fit a very specific output supply pattern that he is privy to. It’s actually a combination of
        Logic and educated guesses that become physically confirmed more and more as certain aspects of the build process manifest and takes place. He has watched it happen enough times naturally, and knows what spikes to watch for. Orders come in, raw material get used and demand increases and so on. No real magic to his methods, and while he’s clearly in the know, it is a round about way of bulding conclusions without the need for anyone to really violate the sprit of a Nda.

  • Sleetui

    Would really not mind a new SE model to be released. Love the 4-inch regardless. The power of a 6S but a longer battery life? Count me in for another upgrade.

  • Tom Mermul

    I Love my se! Would be happy about an Update every year. Maybe the Same Design as the 7 just in 4 Inch. That would be great

    • Johnny

      Agree

    • Vince Reedy

      All they have to do is put 3D Touch on the SE and I would buy it

  • Blacklight: Retribution

    I plan to buy the iPhone SE next year.

  • RK

    Just wondering what would they call it ? iPhone SE2

  • aces99

    I hope Apple refreshes and comes out with an updated SE. I love the SE for the small form factor and how it feels holding it in my hands. I don’t need or want a big phone when I am out and about. The SE fits nicely in my pocket. If I need a bigger screen for something I got my iPad for that. Apple should come out with 3 iPhone sizes, 4″, 4.7″ and 5.5″.

  • Xee

    What Apple need to do is get rid of those ridiculously over sized screen bezels and top and bottom chin. Then the form factor on each would reduce. Take a look at the Xiaomi Mi Mix, it has 93% glass on the front, and looks amazing!!

  • Stoffsprenger ✓ᵛᵉʳᶦᶠᶦᵉᵈ

    I’m no branch expert but I think it would be awesome if Apple started to release three models in their September events.

  • I left iOS due to their small screen sizes and only went back when the 6 was revealed and got the plus

  • Hussain Alsanona

    IMO, I think Apple should do 4.5″, 5.2″, and 5.8″ with the new design which is smaller in the hand. So, iPhone 8, iPhone 8 Plus, and iPhone 8 Pro.

    • Sam Apostel

      and everybody buying will be forced to buy new cases and docks, thats why I like that apple has kept the iphone 5 form factor for the SE, and just slightly adjusted to 6 to the 7 (camera bump is bigger and useless headphone port in cases).

      I sincerely hope that apple won’t be changing up everything but will overtime get rid of the camera bump, include double lens and 3D touch in all 3, integrate USB 3.1 (or even thunderbolt 3, imagine the data transfer speeds and the versatility with every macbook accessoire, the ability to use an iPad/iphone as second screen, plug and play, native in iOS,… the possibilities…)

      we can only wait, so I’ll be waiting