Despite reports of a production cutback of its iPhone 13 and new iPhone SE at Apple, BoFa analysts say iPhone demand still remains strong.
Following the launch of the $429 5G iPhone in early March, Apple lowered trade-in values for most iPhone models, Bank of America analysts said.
25% of global survey respondents still owned an iPhone 8 or earlier, according to the analysts and old iPhone users are the target audience for the iPhone SE.
“While these articles might lead some investors to think there is risk to demand, we believe demand for iPhones remains strong based on our analysis of iPhone trade-in prices,” the Bank of America analysts said in a note.
According to the bank, Apple lowered trade-in values for some iPhone models after the launch of the $429 iPhone SE in early March.
An iPhone 12 Pro Max, the newest model available for trade-in, is now worth $650 as opposed to $700 before the launch, the note highlighted.
“This compares to the year 2019 when Apple was offering high trade-in prices vs 3rd parties to drive upgrades,” the analysts explained.
“Separately, China has imposed another round of lockdowns in Shanghai; however, as we previously pointed out companies have learned to manufacture through COVID and Apple/Foxconn have the ability to relocate production to other areas and, as of now, we do not expect a material impact from these shutdowns.”
The analysts also said that a global survey it conducted in January showed 25% of respondents still owned an iPhone 8 or earlier. Old iPhone users are the target audience for the iPhone SE.
“We see this as an opportunity for driving a replacement cycle,” Bank of America said. “Apple could be targeting to upgrade these users to a newer iPhone which could be a reason Apple still accepts the iPhone 6 and 6 Plus models for trade-in in China but not in the U.S. and UK.”
The bank believes Apple could benefit from increasing the installed base of iPhones, which can then be monetized to improve services revenue.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.