Analyst: Apple cuts iPhone SE 3 5G orders, iPhone 13 mini sales are "dismal" and unattractive

With the disruption of the supply chain and the outbreak of the Russian-Ukrainian war, Apple has cut iPhone orders for 2022, and there will be a decline in the near future. That said, services are emerging as a "key differentiator" for Apple's earnings.

Seeking Alpha is highlighting several analyses on the importance of iPhone orders and services. The annual production target for the iPhone dropped another 9 million units to 254 million, Loop Capital analyst John Donovan said in a research note. He was also cautious about additional cuts "in the not too distant future".

John Donovan believes that Apple will cut iPhone production orders to between 245 million and 250 million. For the iPhone SE 3, he said orders have been cut by 20 million. Analyst Ming-Chi Kuo also recently revised his forecast for low-end iPhone shipments to 15-20 million from 25-30 million.

"Citing several factors, such as the Ukraine-Russia war, supply chain disruptions, and other usual reasons, digging deeper and finding some additional insights," John Donovan wrote in a note to clients.

The analyst also commented on the "dismal" results for the iPhone mini, saying Apple is aware of its "limited appeal."

"Nevertheless, apparently this lack of demand has surprised AAPL and is moving to more iPhone 13s ," John Donovan explained, a "smart move" by Apple for the iPhone SE 5G and iPhone 13 the same processor.

While iPhone orders may struggle a bit in 2022, David Vogt of investment firm UBS believes that services like Apple Music, Apple TV+, and iCloud are increasingly becoming a "key differentiator."

Seeking Alpha, which surveyed more than 4,000 iPhone users from four different geographies, he found that upgrade and retention rates in the U.S. remain high, with iPhones lasting around 2.3 years.

"Other key findings from the survey include: Apple Music, iCloud, Arcade, and Fitness have higher usage (excluding China), while Apple News is 'flat' and Apple TV+ appears to have leveled off.

Users using high-end devices, such as the iPhone 12 and 13, also drove Apple services revenue. App Store spending "moderates" after "COVID-related strength" and Apple Pay adoption continues to increase. "

Importantly, by early April, Apple was removed from JPMorgan's analyst watch list, citing "concerns about consumer spending."

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