Why did the iPhone 14 series not increase in price under high inflation? what analysts say

　　Author: Li Ailin

　　On the 7th local time, Apple held its annual autumn conference. The most surprising thing about this conference was that the price of all iPhone 14 models did not increase.

Before the launch, Wall Street financial institutions including Bernstein, JPMorgan and Credit Suisse expected Apple to increase the price of the iPhone 14 Pro by $100.

　　Joshua Warner, a senior analyst at Jiasheng Group, told Yicai.com that the inflationary environment has pushed up everything from wages to transportation costs. Compared with previous years, consumers may be more sensitive to prices, and tight budgets force consumption Apple is prudently priced with consumers tilting spending more toward necessities.

“Furthermore, after the explosion in demand and technology during the pandemic, we have seen some warning signs that demand for hardware products such as smartphones, game consoles and PCs may weaken,” he said.

　　Analyst: Sacrifice profit for share

　　The background for Apple not to raise prices is the continuous strengthening of the US dollar and the continued turmoil in the supply chain.

　　In July, when Apple announced its second-quarter earnings report, it warned that currency fluctuations would cause a loss of $5 billion in third-quarter revenue.

According to Credit Suisse's previous calculations, every 8% to 10% appreciation of the dollar will lead to a 1% drop in US corporate profits.

However, the strength of the US dollar has not been fully released. The US dollar index broke through the 110 mark this week, continuing to hit a new high since 2002, with a cumulative increase of 14% since the beginning of the year.

The high dollar operation has put the performance of US companies to the test in the third and fourth quarters.

　　Fan Boxuan, an analyst in the technology industry of Sirui Investment, said in an interview with a reporter from China Business News that behind Apple's decision not to raise prices, there is also a choice between its own profit and market share, sacrificing profit in exchange for share.

"On the one hand, the US dollar settlement system between Apple and its suppliers has brought higher settlement prices to the latter, but Apple itself has incurred more costs; on the other hand, the supply chain is still relatively expensive under repeated epidemics With the turmoil, Apple needs to strike a balance between keeping inventories low and maintaining production," he said.

　　According to a report released by the International Data Corporation (IDC) on August 2, in the second quarter of this year, Samsung mobile phones ranked first in the world with a market share of 22%, while Apple ranked second with a market share of 16%.

　　Shares tend to soften after launch

　　Overnight, Apple shares rose 0.9% with the broader market throughout the day, down 12% year-to-date, and the S&P 500 fell 17% over the same period.

　　Fan Boxuan said that looking back over the past three years, Apple’s stock price tends to fluctuate and decline in a week or two after the autumn conference, because its innovation is not as good as the capital market expected.

"Investors expected Apple to launch disruptive products or functions at the launch, but the expectations were often not met, so they would usher in a stage of high expected release. However, in the long run, with the development of chips and automobiles , as well as excellent profitability and stable cash flow, Apple is still a scarce high-quality asset in the secondary market." He said.

　　In 2022, the Federal Reserve launched a "super rate hike cycle", which has raised interest rates four times in a row since the beginning of the year, with a cumulative rate hike of 225 basis points.

According to the FedWatch Tool of CME Group, as of press time, the probability of raising interest rates by 75 basis points in September is as high as 76%.

　　The U.S. Federal Reserve has aggressively tightened monetary policy, and the tech sector, which has led U.S. stocks for most of the past decade, has fallen.

As of Wednesday's close, in terms of the year-to-date performance of the 11 sectors of the S&P 500, the technology sector has plunged 23% this year, making it the second-worst performing sector after the communications services sector, which has plunged 31% and 11 sectors. Only two sectors posted gains, with energy the biggest winner, up 41%, followed by utilities, up 4%.

　　Fan Boxuan said that the Fed is still in an interest rate hike cycle, but there may be a policy shift in the next six months to a year. "Once the rate hike moves are less aggressive, such as the rate hike from 75 basis points to 50 basis points, it may be that U.S. stock investors will see to the hour of hope".