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A couple months ago, investors were getting accustomed to the notion that Apple (NASDAQ: AAPL ) may release new iPhones as early as June or July. That would have accelerated the product cycle to less than a year and put competitive pressure on rivals that have just launched new flagship devices within the past couple of months. On the last conference call, Tim Cook hinted that new models might not be due out until "this fall."
There's now more evidence to back up that theory. Morgan Stanley analyst Katy Huberty, who rates Apple at "overweight" with a $540 price target, recently traveled to Hong Kong and Taiwan for some supply checks. Huberty brings back word that Apple is preparing to ramp up production of displays for the next iPhone in June and July, a few months ahead of a planned launch in September.
The analyst also sees evidence of an affordable iPhone that could hit mid-range unsubsidized price points. Huberty thinks that Apple will still position this model at a premium relative to competing devices in China, but it is still expected to generate healthy unit sales.
The iPhone 5 had been off to a relatively slow start, but Huberty thinks demand for the new flagship is ramping up and should meet carrier volume forecasts. Apple's moves to make the older iPhone 4 more affordable are starting to pay off, with near-term demand on the rise.
Huberty expects Apple to ink a deal with China Mobile (NYSE: CHL ) by year's end, in part because the Chinese government is expected to issue TD-LTE licenses later this year. While the iPhone has been cited as reason for China Mobile's declining market share of 3G subscribers, the dominant carrier has been reversing that trend over the past couple of months as it beefs up 3G coverage and pushes low-cost devices.
By the looks of it, the iPhone 5S and affordable iPhone will have to wait.