Apple iPhone SE Sales Are 'Uninspiring,' Supply Chain Analyst Warns

Largan Precision Co., Ltd. reported its March sales at NT$3.02 billion, suggesting 1Q16 sales of NT$9.27 billion, which would be an eight quarter low.

SinoPac’s Joy Lin maintained a Neutral rating on Apple Inc. AAPL.

Supplier Misses Expectations

Lin mentioned that Largan’s lackluster sales came amid “uninspiring” sales for the new iPhone SE. “Largan said APR sales in a best-case scenario would be on par with MAR, adding that future demand was uncertain,” Lin stated.

Largan’s March and 1Q16 sales came in below the estimates. The analyst pointed out that the weighting of 10MP and higher products declined to 40-50 percent, while that of 5MP products rose 20-30 percent.

“Given current order visibility, we project flattish APR sales, and since iPhone 7 isn’t slated to launch until SEP-OCT, the outlook through 1H16 is uninspiring,” Lin noted.

Neutral On Apple

Lin explained that the Neutral rating was based on the lack of momentum expected through 1H16, given that new model launches were not expected during this time.

The analyst also stated that most handset vendors had adopted a “wait-and-see” stance regarding the adoption of dual lens.

In addition, resolution upgrades has slowed in 2016, with several mid and entry level models having already adopted 10MP+ lens in 2015.

Following Largan’s high earnings base in 2015, the analyst does not expect the earnings momentum to resume before 4Q16.