Apples main investor concern this quarter: demand

div classBodysc17zpet90 cdBBJodivpBy Nivedita Balup

pReuters – Apple Inc investors have for years cheered investments to expand its supply chain to meet feverish global demand for iPhone and MacBooks. Now, the question is whether the company can sell everything it made.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pRising costs for fuel, groceries and other essentials in the U.S., Europe and Asia has spurred concerns about lower consumer spending on tech gadgets, and Wall Street now is uncertain whether Apple can sell as many iPhones as it did last year.p

pApple reports fiscal secondquarter results on Thursday.p

p“Demand is the focus, given the inflation pressure in United States, global and Chinas economy uncertainties… Supply issue is important too, but it is more short term,” said Jeff Pu, an analyst at Haitong International Tech Research.p

pIn China, the world‘s largest smartphone consumer market, total industry phone shipments this year are expected to be 300 million units from about 325 million units last year, according to research provider Trendforce, which expects more deterioration as China’s economy takes a hit from strict COVID19 curbs and the Ukraine war.p

pTo grow its footprint elsewhere in China, which generates at least a fifth of Apple‘s revenue, the company in March launched a lowcost 5G iPhone SE to woo consumers looking to upgrade on a budget. But that plan might not succeed as fewer consumers plan upgrades, according to Counterpoint Research’s Jeff Fieldhack.p

pDemand for 5G phones is expected to dwindle in China, too, as consumers limit spending to everyday essentials amid slowing economic growth.p

p“When we sit here half a year from now, we‘ll probably say that this was the quarter where there’s this new wave of headwinds that came in and shifted the market around,” Canalys analyst Runar Bjørhovde said. “Its commencing a lot of challenges that will come up in the next few quarters.”p

pTo be sure, Apple, a pandemic winner as demand for its iPhones, MacBooks and services surged, still grew market share last year due to the popularity of its iPhone 13 series.p

pApple is expected to report revenue of 93.89 billion for its fiscal second quarter, a 4.8 rise, but its slowest growth rate in six quarters. Sales of iPhones, where Apple gets most of its revenue, are expected to fall slightly to 47.88 billion, according to Refinitiv data.p

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ppGRAPHIC: iPhone sales growth at risk https:graphics.reuters.comAPPLERESULTSzgvomlajbvdchart_eikon.jpgp

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ppClick here for an interactive graphic: https:tmsnrt.rs3ERUGHXp

pThough Apple lost out on billions of dollars in sales last year due to product shortages, it escaped much of the supply issues that plagued other tech companies, thanks to its buying power, and the companys ability to place custom orders for components used in its products. p

pIt also prioritized manufacturing more expensive, highmargin products. Apple forecast that those supply issues would continue to decrease in its second quarter, another reason why analysts have shifted focus to the demand side.p

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pp Reporting by Nivedita Balu in Bengaluru editing by Bernard Orrp

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