Due to the popularity and strong demand of iPhone 12 Pro, Apple has reportedly reduced the production of iPhone 12 mini by 2 million and will build 2 million iPhone 12 Pro units instead. Morgan Stanley’s note to clients, obtained by Philip Elmer-DeWitt’s Apple 3.0 (ped3.0) states that iPhone 12 Pro models will have a much better December quarter than expected and iPhone 12 sales will hit an all-time high.
Out of the four models in the new flagship iPhone 12 series, iPhone 12 mini has had disappointing sales. Like the bigger models, Apple released the smallest 5.4-inch iPhone with advanced technology like A14 Bionic chip, 5G network support, Super Retina XDR display, Ceramic Sheild protection, Ultra-wide and Wide lens, Dolby Vision, Face ID, and more. But the model did not appeal much to the masses. Consumer Intelligence Research Partners (CIRP) reported that although iPhone 12 models had better sales than iPhone 11 models, iPhone 12 mini sales lagged behind other models, especially iPhone 12 Pro models.
Apple focuses on producing 2 million iPhone 12 Pro units instead of iPhone 12 mini
Based on market and consumer trends, it can be assumed that the smallest and cheapest iPhone 12 mini did not hit it with consumer because of a diverse range of iPhone models for various price points, user preference for larger smartphones with bigger batteries, and Apple’s 0% installment plans to buy more expensive smartphones. The disappointing sales have made Apple switch from the production of 2 million iPhone 12 mini to 2 million iPhone 12 Pro units. The note states:
We continue to believe that the iPhone will outperform expectations in the December quarter, as the mix shift to higher-end iPhone 12 models is a tailwind to ASPs and revenue growth. iPhone 12 Pro lead times remain extended far beyond any model launched in the past 4 years at 10 days. Lead times decreased from 22 days ~2 weeks ago as Apple ramps iPhone 12 production signaled by our iPhone supply chain team, led by Sharon Shih, recently raising March quarter iPhone 12 Pro builds by 2M units (which offset a 2M build reduction for the iPhone 12 mini).
The report further details that iPhone 12 demand in China was higher than in the United States and the sales estimations show 47% year-on-year growth in the December quarter. And based on the current upward projections in revenue, it can be predicted that Apple will have a promising 2021 March quarter.
In China, we believe lower end iPhone 12 models are performing better than in the US, and we estimate iPhone shipments grew ~47% Y/Y in the December quarter, according to data from the CAICT. Similarly, data from Jiguang shows that the iPhone gained over 50bps of smartphone installed base share in China (Y/Y) in the month of December, reaching a new 18 month high of 20.3% market share, driven in large part by adoption of the iPhone 12, which has captured the most iPhone installed base share of any iPhone launched in China over the past 4 years through the first full month after being launched.
Finally, results from Apple’s Taiwan supply chain points to a 3rd consecutive month of accelerating Y/Y revenue growth (to +20% Y/Y) and a third consecutive month of stronger than seasonal growth, suggesting solid momentum as we head into the March quarter.
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