Jefferies Downgrades Apple to Underperform Amid Cancellation of All-Glass iPhone Model
Apple investors have been issued a fresh warning regarding the company's product cycle. Jefferies downgraded Apple to Underperform from Hold, citing concerns that the cancellation of an all-glass iPhone model may limit the company's ability to increase prices on its devices.
The analysts at Jefferies, led by Edison Lee, stated that supply chain checks indicate Apple canceled the 20th-anniversary all-glass iPhone due to poor production yields. This cancellation is seen as a major setback for Apple's efforts to introduce higher-priced iPhones amid rising memory costs.
The analysts estimated that the canceled model could have carried a retail price of approximately $2,060, while its design features may be incorporated into future Pro and Pro Max devices, potentially providing another avenue for Apple to increase pricing and margins.
Jefferies also expressed concerns about the upcoming iPhone 18 Fold, which is expected to start at $2,199 for a 256 GB model and reach $3,099 for a 2 TB version. The analysts forecast 14 million units of the foldable device in fiscal 2028.
Another complication facing Apple is rising memory costs, with an additional 4 GB of DRAM potentially adding $60 to $70 to an iPhone's bill of materials, constraining hardware upgrades if component prices remain elevated. Despite strong underlying iPhone demand, Jefferies' concerns highlight the challenges Apple faces in maintaining premium pricing without a major new iPhone form factor.