BofA: iPhone demand strong despite reported cutbacks

BofA says that lowered trade-in prices is one strong indicator of demand…

What you need to know

Recent reports state Apple is cutting some iPhone production.
The Bank of America says that demand for iPhones remains strong.
That’s because Apple has lowered its trade-in prices.

The Bank of America says that demand for the iPhone remains strong despite reports Apple is cutting back on production, with decreasing trade-in values a key indicator.

From CNBC:

Bank of America analysts said on Wednesday that iPhone demand is still strong despite a recent report that said Apple cut production of its iPhone 13 and new 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.

Following the launch of the iPhone SE in March, Apple cut the trade-in price of the iPhone 12, indicating strong demand because Apple doesn’t need to pay more money to convice people to trade in their old phone for a new model.

“This compares to the year 2019 when Apple was offering high trade-in prices vs 3rd parties to drive upgrades,” the analysts said.

The report also cites a global survey from January indicating that 25% of respondents still owned an iPhone 8 or earlier, indicating Apple has a decent target audience for its new budget smartphone.

“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.”

A report Monday stated that Apple was cutting iPhone SE production by about 20%.