Apple Inc. Rumored to Launch iPhone 7 Sooner Than Expected

This rumor would be good for Apple's financial results this year if true, but here's why this Fool isn't counting on it.

Ashraf Eassa
Ashraf Eassa
Dec 30, 2015 at 9:30AM
Technology and Telecom

Starting with the iPhone 5, Apple (NASDAQ:AAPL) has launched its latest smartphones in September. This release cadence meant that each new iPhone flagship got about a year in the sun before it was replaced with a newer, better device.

This strategy worked quite nicely as the company has seen iPhone shipments grow nicely year after year, with the iPhone 6/6 Plus generation proving to be particularly wonderful products for Apple and its stockholders.

However, it's becoming plain as day from analyst reports to the financial guidance that major Apple suppliers have been giving that the iPhone 6s/6s Plus are not doing as well as Apple had hoped. Indeed, the common view today is that Apple will see iPhone shipments and revenues decline this year -- the first ever for iPhone.

That said, although I wouldn't take it as gospel, a report from tech news website Fudzilla suggests that Apple may be planning to do something that could change the trajectory of iPhone sales in fiscal 2016.

iPhone 7 launch in the first half of 2016?
Per the report, Apple is planning to launch its next-generation flagship iPhone -- tentatively dubbed iPhone 7 -- during the first half of 2016. By doing so, Apple would "pull in" the spike in sales that the company would have seen early in its fiscal 2017 into its fiscal 2016.

This pull-in of demand could allow the company to actually register iPhone growth in the current fiscal year rather than the widely forecasted decline for a number of reasons.

Firstly, there are people who simply must have the new iPhone. Next, the first half of 2016 is when many of Apple's smartphone competitors are expected to release their own flagships. Although the iPhone has strengths that go beyond hardware specifications and features, the greater distance Apple can put between its flagships and its competition's flagships, the better it is for its market share.

In theory, an iPhone 7 pull-in sounds pretty nice, particularly as it would strongly imply a pull-in of future iPhones. However, there's one big reason (among many) that I'm skeptical of this report.

Will Apple's A10 be ready in time?
According to a number of rumors and reports, Apple will be the first customer to utilize TSMC's (NYSE:TSM) new InFO chip packaging technology. In a nutshell, this technology allows for a chip package to be smaller (TSMC says "greater than 20%" reduction) and improvements in performance and thermals.

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Now, per TSMC on its most recent earnings call, the contract chipmaker is targeting a "volume ramp-up" during the second quarter of 2016. This schedule would make it quite difficult for Apple to launch the iPhone 7 in any real volume in the first half of 2016.

Indeed, if TSMC is ready to ramp volume on its InFO packaging technology at the very beginning of April (call it April 1), then maybe there's a chance that Apple could have enough chips to deliver in excess of 10 million phones at launch. However, if the ramp of this technology is more toward the end of the second quarter of 2016 (say, June), then an iPhone 7 launch in the first half of 2016 seems virtually impossible.

I'm not putting a lot of faith in this rumor
Although it would be very nice to be able to buy the new iPhone sooner than September, and although such a pull-in could help bolster iPhone shipments pretty significantly during fiscal 2016, I don't think this is particularly likely.

That said, if we start seeing independent confirmation of this rumor from other sources (particularly KGI Securities analyst Ming-Chi Kuo, who is currently on record saying that the iPhone 7 will launch in the third quarter ), then I would be much more inclined to believe it.