Sales of Apple's (NASDAQ:AAPL) iPhone 6 and 6 Plus models have been so good that the company might delay the launch of its next-generation iPhone models, DigiTimes said in a report published on Monday.
Although Apple had reportedly expected iPhone 6 and 6 Plus unit shipments to hit approximately 50 million, the actual figure is set to "exceed 60 million units," according to DigiTimes, citing "Taiwan-based supply chain makers."
The potential rationale behind delaying a next-generation iPhone
A newer iPhone is almost always going to be more expensive to build than an older-generation iPhone. Newer components simply cost more than older ones, and newer iPhones usually include additional components not found in older-generation devices.
If Apple were to keep selling the iPhone 6/6 Plus for longer, then not only would it defer a shift to a more expensive-to-build phone, but it would continue to enjoy declining prices on iPhone 6/6 Plus components.
In that case, if Apple were to keep iPhone 6/6 Plus selling prices flat, this would mean Apple would make more money per iPhone 6/6 Plus device sold. Although Apple typically lowers prices with each new release.
The downside to this potential scheme
Although the idea of flat average selling prices but lower component costs might sound amazing to Apple stockholders, keep in mind that there are a number of forces working against Apple.
Customers expect that new iPhones will hit the market in the fall. This means the closer it gets to Apple's expected September/October iPhone release, the steeper the fall-off in iPhone sales will get as customers await the next iPhone launch.
Further, although the iPhone 6/6 Plus are fantastic devices, the competitive landscape in the high end of the smartphone market is still quite fierce; Apple will need to deliver continued improvements and innovations to both draw in Android switchers as well as prevent iPhone users from switching to Android.
If there's a delay, don't expect it to be too long
If Apple does, in fact, delay the launch of its next-generation iPhone, then I wouldn't expect too long of a delay. Apple's last several iPhone launches have been in September, but in the past, Apple has launched iPhones in June and October. Waiting until June 2016 to launch a new iPhone would probably be a bad move, but waiting for October 2015 could actually be beneficial.
In particular, Apple is expected to build its next-generation A-series processor, widely referred to as the A9, on a 14/16-nanometer FinFET manufacturing technology from Samsung (NASDAQOTH:SSNLF) and/or TSMC (NYSE:TSM).
According to chip equipment vendor Ultratech (NASDAQ:UTEK) on its earnings call earlier this month, the semiconductor industry continues to "grapple with issues for FinFETs to achieve acceptable yields." If Apple pushes out the next iPhone launch a bit, this could buy its foundry partners a little bit more time to improve A9 yields in order to bring the company's A9 costs down.
Keep an eye out later today
Apple is scheduled to release its earnings results following market close on April 27. Keep an eye out for what kinds of iPhone unit shipments it reports for the quarter and what seasonal trends it expects for iPhone in the coming quarter.
If iPhone sales are expected to remain unusually strong, then perhaps there is merit to this report that the next iPhone will be delayed. If Apple expects the traditional seasonal declines, it would probably make sense to launch the next iPhone as early as possible.
Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.