Apple Is Powerful, When The World Enters Recession IPhone Sales Keep Increasing

IPhone sales continue to increase. (photo: doc. pixabay)

JAKARTA - The current global smartphone market may be sluggish, but the iPhone 13 continues to sell well. Even Apple Inc expects sales of the upcoming iPhone 14 to be even better when it launches.

Apple's slightly higher expectations for the upcoming iPhone 14 underscore a growing belief among Wall Street analysts that the Cupertino, California-based company's product sales are likely to hold up better than the broader smartphone industry if the major economy enters a recession.

Apple, which reports third-quarter fiscal earnings on July 28, relayed its expectations to suppliers in preliminary estimates as it trialed production of the iPhone 14.

Analysts believe that inflation in core goods such as food and fuel has taken a lower toll on its relatively rich user base. Industry observers such as the chairman of Fubon Securities Investment Services Co., Charles Hsiao, believe consumer demand for electronic products will slow down overall this year and next year.

The economic slowdown in China has been eating away at the smartphone market. This took global sales down 10% year-on-year to 96 million units in May, according to Counterpoint Research. "This is only the second time in nearly a decade that the monthly figure has fallen below 100 million handsets, Counterpoint Research said.

But two iPhone supply chain sources told Reuters that iPhone sales continued to do well in July despite signs of declining market demand for other smartphone makers. "Others are starting to take a beating," said one source.

A second source said July shipments for iPhone 13 from one manufacturer were even a third higher than July last year. That pattern is particularly unusual as sales of current iPhone models tend to slow down in July and August as consumers wait for new models that Apple traditionally releases in September 2022.

"Judging from the shipping, iPhone 13 sales are pretty good," said a second source.

According to Cowen analyst Krish Sankar, iPhone products continued to sell well late in the cycle in part because "Chinese demand rebounded sharply after the lockdown ended and iPhones were the beneficiary" of the June shopping holiday in China.

As per its annual schedule, Apple has started trial production of the iPhone 13 successor with the aim of increasing mass production by August so the device can start shipping in the fall. The initial shipping estimate that Apple gave suppliers was "slightly higher" than last year's iPhone 13.

"It's a bit higher than last year. It's good, but not very good," said a second source.

But analysts still expect to believe iPhone 13 shipments in the third quarter will fall by around 1%, while overall handset shipments could fall by as much as 13%.