The large base of customers set to upgrade their iPhones could create a "powder keg" that could revive Apple's prospects in China, Cowen analyst Timothy Arcuri wrote on Wednesday.
Arcuri has long maintained that Wall Street's estimates for Apple's next iPhone are "way too low," accounting for projected sales of both new iPhones and the iPhone 7 series in September through December. But a resurgence in China would be an especially crucial boost to the company.
This time last year, Apple missed Wall Street's earnings expectations, due largely to a 26 percent decline in sales in Greater China. Major regional shopping hub Hong Kong has been plagued by the strong dollar, and the company faces an upswing in competition from local brands like Huawei, Oppo and BBK.
To be sure, Apple is tight-lipped about its plans for future products, and typically doesn't comment on speculation. But Apple chief executive Tim Cook said in October that he is "very bullish on China" long term.
Despite a customer base that's primed to buy, Arcuri said that Apple still has some issues left unresolved with the upcoming phone.
Apple may be trying to integrate a Touch ID sensor into a new type of OLED display, a feat that remains challenging, Arcuri wrote. That could delay the shipments of the phones, which have long been launched at events in September.
"The goal continues to be finalization of fingerprint sensor spec by May, but if the internal solution is not workable, assembly of this OLED version could be slightly postponed to Sept vs. the normal late July to August timeframe which would effectively delay shipment (although launch would still come in early Sept)," Arcuri wrote.
Disclosure: Cowen and Company or affiliates make a market in Apple shares.