New iPhone Reportedly Faces 15% Production Cut, Apple (AAPL.US) Market Value Temporarily Evaporates by $100 Billion! JPMorgan Reassures Market: This Is Seasonal Rebalancing, Not a Collapse in Demand

According to Zhitong Finance APP, JPMorgan released its Week 5 “Apple Product Supply Tracking” on October 11: the global delivery cycle continues to decline but remains “healthy.” The iPhone 18 Pro and Pro Max delivery wait times decreased from 17 and 28 days in Week 4 to 14 and 23 days, respectively. However, the report highlights a contrast—in the US, the largest market for high-end models, the Pro Max delivery cycle remains at 28 days, completely unchanged from the same period last year. JPMorgan concludes that this round of order cuts points to changes in the base expectation and launch rhythm, rather than a collapse in demand. JPMorgan maintains its “Overweight” rating and a $340 price target for Apple (AAPL.US).

On October 9, two days earlier, the media reported that Apple had notified some suppliers to reduce orders for iPhone 18 Pro and Pro Max components in October by 15%-20%. On that day, Apple’s stock price fell by 2.07% intraday, with market capitalization shrinking about $103 billion compared with the previous day. This marks John Ternus’ first demand-side challenge since becoming CEO on September 1—his first product launch event (September 9) just introduced the iPhone 18 Pro series and the first foldable screen Duo.

Delivery cycle shortens by 6 days, but US Pro Max still at 28 days

JPMorgan’s tracking shows that in Week 5, the average global delivery cycle for the two models was 14 days and 23 days (compared to 17 and 28 days in Week 4), and in the same period last year, it was 20 and 29 days. The year-on-year gap has thus expanded to 6 days for both models (compared to 4 and 2 days in Week 4). For weekly changes, Pro shortened by 3 days, Pro Max by 5 days, whereas in the same week last year, both models only shortened by 1 day each.

Looking at regional data, trends are not consistent:

United States: Pro and Pro Max are at 14 and 28 days, respectively (vs. 21 and 28 days in Week 4), the same as last year’s 21 and 28 days. Pro saw its first drop since Week 2, falling to the same level as Germany and the UK, while Pro Max remains unchanged from last year. The US accounts for about 34% of iPhone shipments.

China: 15 days and 22 days (18 and 28 days in Week 4), 15 and 29 days last year. Pro shortened by 3 days, the same decline as last year, so remains flat vs. last year; Pro Max shortened by 6 days (only 3 days last year), meaning the year-on-year gap widened from 4 to 7 days. China accounts for about 19%.

Germany and UK: Both regions show Pro at 14 days, Pro Max at 21 days (14 and 28 days in Week 4), while last year Germany was at 22 and 30 days, and the UK at 21 and 28 days. Pro Max decreased by 7 days in both places, and both models are now below last year's levels. The two regions account for around 3% and 4%, respectively.

In-store pickup reflects similar structural differences: all versions of Pro are available for pickup in the US, but none of Pro Max are; in China, only the dark red and silver Pro Max are available; in Germany, only the glacier color Pro Max is available, and in the UK, only black.

JPMorgan’s interpretation is that globally, the year-on-year weakness mainly comes from the international market; Pro Max wait times are unchanged from last year in the US, indicating this largest market’s demand-driven nature is stronger than other regions.

15%-20% order cuts: Two versions, one is “structural reallocation”

According to reports, Apple turned conservative on shipment expectations for the two high-end models since early September, with October component orders reduced by at least 15%, and some components by as much as 20%. One executive level source said, “In October alone, Apple cut orders for the two high-end models by 15% to 20%.” The reason cited is price hikes: surging memory chip costs forced Apple to raise the US starting prices for Pro and Pro Max by $100 each to $1,199 and $1,299. The report also acknowledges that the production cuts only affect some suppliers, and it is unclear if reductions will continue in November.

However, supply chain and listed “Apple Chain” companies have a different take. Several Apple supply chain companies responded that this account is one-sided—Apple has shifted some Pro orders to Pro Max, so the overall order volume for the Pro series has not decreased, which actually benefits the Pro Max supply chain; specific adjustment: Pro cut by 10%-15%, Pro Max increased by 10%-15%, total volume unchanged, while the first foldable iPhone Duo increased by 30% (but total volume still not exceeding 10 million units).

JPMorgan gives four reasons in support of “no need to lower expectations by as much as supplier reports”: First, order cuts at this time are routine in a product cycle, as Apple usually produces a “buffer volume” to allow for reallocations if demand is better; second, cuts are from a higher YoY expectation base, so investors don't need to adjust expectations by the same percentage; third, delivery cycles indicate the 18 Pro and Pro Max remain resilient compared to the iPhone 17, with most gaps due to the absence of the base model, while the high-revenue contributing iPhone Duo has yet to launch; fourth, a ~10% year-on-year price increase for high-end models means this round’s revenue growth relies more on ASP than shipment volume (with consensus that iPhone shipments in 2027 will be comparable to 2026).

Terminal data says: Strong in China, flat in the US, weak elsewhere

Terminal data is more straightforward and polarized than order numbers. According to Counterpoint Research, iPhone 18 Pro series sales in the first three days after launch (September 18–20) were about 12% higher than the Pro series’ first week last year; these three days also gave Apple 33% of the Chinese smartphone sales revenue for the week of September 14–20, ranking first. First-day sales in China were about 322,800 units, reaching 130% of the previous generation’s launch-day volume, with Pro Max accounting for 55.5%; by Week 39, the series sold about 1.76 million units in China, up 930,000 from the previous week, and some metrics show activation exceeded 3 million units in the first three weeks.

However, the overall market is still shrinking: Counterpoint says Chinese smartphone weekly sales have seen double-digit YoY declines since July, with Week 38 still 17% below last year. Senior analyst Ivan Lam believes the delayed launch of the standard iPhone 18 has driven some consumers to upgrade to the Pro, and Chinese brand flagship price increases by over $200 have also raised the price anchor.

Regional data from Bernstein echoes this. Tech analyst Mark Newman notes that initial demand for iPhone 18 Pro and Pro Max in the US has slightly declined y/y in the low single digits (with Pro wait times shorter and Pro Max longer), while Week 1 sales in China are +12% y/y, and in India +19% for the first three days, with Japan, South Korea, and the UAE relatively weak. He also provides longer-term data: global iPhone sales were +7% y/y in August, the 18th straight month of growth, though slower than +14% in July; boosted by a +6% y/y ASP, August iPhone revenue was up +13% y/y—selling slightly less, but at higher prices, so total revenue is still rising.

UBS’s observations are similar: its analysts see delivery wait times shortening in 30+ markets, and worry that price increases will make consumers less willing to upgrade; however, UBS maintains its FY iPhone shipment forecast at 261 million units, +15.4% YoY.

What’s really changed: Breaking up the launch—base and foldables not out yet

Looking at these contradictions together, the real key variable this year is the launch rhythm. For the first time, Apple split its fall event in two: only three high-end models launched in the fall, while the standard iPhone 18 and the new iPhone Air are delayed until Spring 2027, with the standard model’s key components not expected to be sourced until year-end. JPMorgan’s report calls this a “new seasonality,” and notes that monthly component data can’t be compared directly with previous years.

The impact is twofold: the supply chain’s pull-in pace in the second half of the year is naturally slower than before—a supply chain manager cited by Nikkei said demand “is not as strong as when all new models launched together”; meanwhile, some consumers waiting for the standard model upgraded to the pricier Pro, which both made up for the base model’s gap and raised the product portfolio’s ASP.

The foldable Duo is another variable: pre-orders open October 16, shipments start October 23, with a US price starting at $1,999 (256GB), and China pricing at 15,999 RMB (256GB), 26,499 RMB (2TB). As of October 10, Apple’s official JD.com flagship store had over 2.01 million reservations, but reservations do not equal sales; supply chain sources say even after a 30% order increase, the Duo’s total volume is still under 10 million units—Ming-Chi Kuo expects 7–8 million shipped globally this year, Counterpoint forecasts around 6 million. User surveys show that 49% of potential buyers cite price as the primary deterrent, and 37% say it doesn’t offer significant functional advantages over current phones; supply is not easy either, with people close to Foxconn’s chain telling Jiemian News that as of September 17, the Duo’s finished device yield was just over 60%.

The root of price hikes is storage, and a 47%-48% gross margin guidance

This round of price hikes wasn’t Apple’s voluntary choice. According to TrendForce, Q1 2026 contract prices for general DRAM are up 55%-60% QoQ, NAND flash up 33%-38%; Q4 DRAM is expected to rise another 10%-15%, and NAND to 15%-20%; mainstream 8GB+256GB bundles’ Q1 contract procurement price has risen almost 200% YoY. The underlying reason is that AI servers and HBM are pulling advanced capacity away—Samsung, SK Hynix, etc. are allocating more capacity to high-margin server memory, squeezing consumer DRAM and NAND. Storage chips’ share in total BOM cost has risen from 10%-15% in the past to over 30%-40%.

These costs are now hitting Apple’s financials. In the June quarter, Apple reported revenue of $109.4 billion, with iPhone accounting for $54.252 billion, nearly half the total; the gross margin that quarter was 50.1% (including about 2 points from tariff refunds), which after adjustment is basically 48.1%. The September quarter gross margin guidance is 47%-48% (including 1 point refund benefit), with management previously saying storage price increases caused over 100% of gross margin compression mid-guidance—in other words, other cost items improved, but DRAM and storage outlays offset all the gains.

Industry-wide price reshuffling has already happened: Huawei nova 16 and Xiaomi 17 Ultra both raised prices on October 9, and insiders expect this wave of increases to last until the end of 2027.

Wall Street’s Divergence

Stock price reactions to “order cuts” are much sharper than those to delivery cycles. On October 8, Apple closed up 1.11% at $340.42 (with the Nasdaq down 1.3% that day), setting a 52-week high of $345.34 in recent sessions. On October 9, it closed down 1.11% at $336.64, with an intraday low of $331.22; at that low, market cap shrank by about $103 billion to $4.865 trillion. The stock is up roughly 25% YTD, and about 38.8% in the past 12 months, trading at 38.6x rolling P/E, above the five-year median of 30.98x—this valuation assumes a “normal product cycle.”

JPMorgan maintains its “Overweight” rating and $340 target, acknowledging consensus sales forecasts for the next few quarters may see moderate revisions downward, but does not think this constitutes a worry for the entire iPhone 18 cycle. Bernstein’s Mark Newman maintains “Outperform” and a 12-month price target of $370, citing Apple’s supply chain outperforming the Android camp and the entry-level iPhone 18 in the first half of 2027 plus the 20th-anniversary lineup in the second half as reasons for continued confidence; but he also warns Q4 shipment progress is slightly behind historical averages—July and August combined shipments are 33 million units, 57% of the estimated 58.2 million for the quarter, below the 60% historical average.

The divergence is not small: Wall Street analysts’ average price target is around $334, with about 58% rating “Buy,” 30% as “Neutral,” and 6 analysts recommending “Sell.”

Ultimately, both sides’ disagreement comes down to a testable but currently unanswered question: can a 10% price increase hold without hurting shipments? Both JPMorgan and Bernstein say yes, but for different reasons—the former betting on ASP and product mix, the latter on the relay from the entry model in the first half of next year to the anniversary model in the second. The next “earnings window” for verification will be Apple’s soon-to-be-released December quarter (holiday season) guidance.