Leading Apple analyst Ming-Chi Kuo said demand for new iPhones is beating his expectations – and much of it is due to Chinese consumers.
Kuo boosted his forecast for iPhone 11 series shipments from 65 million to 70 million units in 2019 to 70 million to 75 million units, and said the supply chain will "grow steadily" in the fourth quarter.
Apple announced the $699 iPhone 11, the $999 iPhone 11 Pro and $1,099 iPhone 11 Pro last Tuesday. Preorders began three days later, and they arrive in stores on Friday.
"Under the premise that Apple doesn't announce the pre-order result, we believe that the change of shipping time offered by Apple's official website is better to reflect the actual demand because Apple's official website accounts for 30–40% of the total iPhone shipments," said Kuo, an analyst at TF International Securities. "We think the reference value of pre-order results announced by other channels is lower."
Consumers in the U.S. prefer Apple's more expensive models, while the standard iPhone 11 appears to be more attractive to buyers in China, according to Kuo.
Kuo said the iPhone 11 demand is "lackluster" in the U.S., where consumers "have the highest loyalty for the iPhone," and there is "strong" demand for Apple's "more expensive iPhone 11 Pro." Kuo bases this on shipment times for the more expensive model, which are now two to three weeks past the launch date. Trade-in programs and Apple's zero-interest installment program helped drive demand for the more expensive phone, Kuo said.
"The demand for iPhone 11 in the Chinese market is stronger than that in the U.S. market," Kuo said, noting that it's a big upgrade for people who still own the iPhone 6, iPhone 6s and iPhone 7. "iPhone 11's price is roughly equivalent to 1–1.3 times the average monthly salary in China, which is close to the price sweet spot (vs. iPhone XR's price equivalence of 1.5–1.7 times the average monthly salary in China)."
This sentiment was echoed by Chinese e-commerce site Fenqile, which told CNBC on Monday that the iPhone 11 is the most popular preorder in China.