New iPhone reportedly sees orders cut by 15%, Apple Inc. (AAPL.US) market value once evaporated by a hundred billion! JP Morgan reassures the market: This is a seasonal realignment, not a demand collapse.

J.P. Morgan released its Week 5 "Apple Inc. Product Supply Tracking" on October 11: global lead times continued to fall but remained "healthy," with wait times for the iPhone 18 Pro and Pro Max dropping from 17 and 28 days in Week 4 to 14 and 23 days. But the report flagged a divergencein the U.S., the largest market for high-end models, the Pro Max lead time was still stuck at 28 days, exactly flat versus the same period last year. J.P. Morgan's conclusion: this round of order cuts points to changes in the expected baseline and launch cadence, not a demand collapse. J.P. Morgan maintained its "Overweight" rating on Apple Inc. (AAPL.US) and its $340 price target. Two days earlier, on October 9, media reported that Apple Inc. had notified some suppliers to cut component orders for the October iPhone 18 Pro and Pro Max by 15%-20%. That day, Apple Inc. shares fell as much as 2.07% intraday, with market value evaporating by about $103 billion versus the prior day. This was the first demand-side test since John Ternus took over as CEO on September 1his first launch event (September 9) had just introduced the iPhone 18 Pro series and the first foldable, the Duo. Lead times shortened by 6 days, yet the U.S. Pro Max is still at 28 days J.P. Morgan's tracking shows that on a global basis, average lead times for the two models in Week 5 were 14 and 23 days (versus 17 and 28 days in Week 4), compared with 20 and 29 days a year earlier. The year-over-year gap thus widened to 6 days for each model (4 days and 2 days, respectively, in Week 4). On a week-over-week basis, the Pro shortened by 3 days and the Pro Max by 5 days, whereas in the same period last year each model shortened by only 1 day in a week. By region, the direction was not uniform: U.S.: Pro and Pro Max at 14 and 28 days, respectively (versus 21 and 28 days in Week 4), and 21 and 28 days a year earlier. The Pro recorded its first decline since Week 2, falling to the same level as Germany and the U.K., while the Pro Max was flat versus last year. The U.S. accounts for about 34% of iPhone shipments. China: 15 and 22 days (versus 18 and 28 days in Week 4), and 15 and 29 days a year earlier. The Pro shortened by 3 days, in line with last year's decline, and was therefore flat versus last year; the Pro Max shortened by 6 days (versus only 3 days last year), widening the year-over-year gap from 4 days to 7 days. China accounts for about 19%. Germany and the U.K.: both at Pro 14 days and Pro Max 21 days (both at 14 and 28 days in Week 4), versus Germany at 22 and 30 days and the U.K. at 21 and 28 days a year earlier. The Pro Max shortened by 7 days in both markets, and both models are now below year-ago levels. The two markets account for about 3% and 4%, respectively. In-store pickup was likewise structural: in the U.S., all Pro versions were available for pickup while no Pro Max was; in China, only the dark red and silver Pro Max were available for pickup; in Germany, only the glacier color Pro Max remained, and in the U.K., only black. J.P. Morgan's read is that the global year-over-year weakening came mainly from international markets; the U.S. Pro Max matching last year's length shows that demand in this largest market is on firmer footing than elsewhere. Order cuts of 15%-20%: two accounts, one of which is "structural reallocation" The report said Apple Inc. had turned conservative on shipment expectations for the two high-end models since early September, with October component orders cut by at least 15% versus the original plan and by as much as 20% for some components; one executive-level source said, "In the month of October alone, we saw Apple Inc. cut orders for the two high-end models by 15% to 20%." The report attributed the cause to price increases: soaring memory chip costs forced Apple Inc. to raise U.S. starting prices for the Pro and Pro Max by $100 each, to $1,199 and $1,299. The report also acknowledged that the production cut affected only some suppliers and that it was unclear whether reductions would continue in November. But supply chain and Apple-concept listed companies gave a different account. Several Apple Inc. supply chain companies responded that this characterization was one-sidedApple Inc. was reallocating some Pro orders to the Pro Max, and total Pro-series volume had not decreased, which was actually favorable for the Pro Max supply chain; the specific adjustment was a 10%-15% cut for the Pro, a 10%-15% increase for the Pro Max, and no change in total volume, while the first foldable iPhone Duo received a 30% order increase (total volume still not exceeding 10 million units). J.P. Morgan gave four reasons to support "no need to revise expectations down by the magnitude implied by the supplier account": first, order cuts at this point in time are a routine move within a product cycleApple Inc. typically builds to a volume with "flexibility built in" and can add more if demand is stronger; second, the cuts are being made from a higher year-over-year expected baseline, which does not mean investors' expectations should be revised by the same magnitude; third, lead times show the 18 Pro and Pro Max remain resilient relative to the 17 generation, with the year-over-year gap stemming more from the absence of the base model, while the iPhone Duowhich contributes a high revenue sharehas yet to go on sale; fourth, the roughly 10% year-over-year price increase for high-end models means this round's revenue relies more on average selling price than on unit shipments (the market consensus expects 2027 iPhone shipments to be flat versus 2026). The answer from end demand: China strong, U.S. flat, other regions weak End-demand data is more direct than order figures, and more fragmented. According to Counterpoint Research, sales of the iPhone 18 Pro series in the first three days after its September 18-20 launch were about 12% higher than the entire first week of the previous generation's Pro series; those three days also gave Apple Inc. 33% of China smartphone sales in the week of September 14-20, ranking first. China first-day sales were about 322,800 units, equivalent to 130% of the same period for the prior generation, with the Pro Max accounting for 55.5%; as of Week 39, the series had sold about 1.76 million units in China, up about 930,000 in a week, while another measure showed activations surpassing 3 million units in the first three weeks on sale. But the overall market is still contracting: Counterpoint said China smartphone weekly sales have been declining by double digits year over year since July, and in Week 38 were still 17% below the same period last year. Its senior analyst Ivan Lam judged that the delayed launch of the standard iPhone 18 pushed some consumers toward the Pro, while price increases of more than $200 on Chinese-brand flagships actually raised the price anchor. Regional comparisons come from Bernstein. Its tech analyst Mark Newman noted that initial U.S. demand for the iPhone 18 Pro and Pro Max was down by a low-single-digit percentage year over year (with Pro wait times shortening and Pro Max lengthening), while China first-week sales rose 12% year over year and India rose 19% in the first three days after launch, with Japan, South Korea and the UAE weaker. He also gave a longer-term measure: global iPhone sales in August rose 7% year over year, the 18th consecutive month of year-over-year growth, but the pace slowed markedly from 14% in July; driven by a 6% year-over-year increase in average selling price, August iPhone revenue rose 13% year over yearselling somewhat fewer, but at higher prices, with total revenue still rising. UBS Group AG's observations pointed in a similar direction: its analysts saw shorter wait times across more than 30 markets and worried that price increases would make consumers less willing to upgrade; nevertheless, UBS Group AG maintained its forecast of 261 million iPhone shipments this fiscal year, up 15.4% year over year. What has really changed is the "split launch": neither the base model nor the foldable has yet come to the table Putting these divergences together, the key variable this year is actually the launch cadence. Apple Inc. split its fall event into two parts for the first time: in the fall it launched only three high-end models, while the standard iPhone 18 and the new-generation iPhone Air were postponed to spring 2027, and components for the standard model are not expected to begin stockpiling until the end of this year. J.P. Morgan called this change a "new seasonality" in its report and explicitly stated that single-month component data is therefore no longer directly comparable with prior years. The impact is two-way: the supply chain's second-half pull-in pace is naturally slower than in prior yearsa supply chain manager quoted by Nikkei said demand was "not as strong as when all new phones were launched together in the past"; and some consumers waiting for the standard model shifted to the more expensive Pro, both filling the volume gap left by the base model's absence and raising the average selling price of the product mix. The foldable Duo is another variable: pre-orders on October 16, shipping on October 23, starting at $1,999 in the U.S. (256GB), priced at RMB 15,999 for 256GB in China and RMB 26,499 for 2TB. Reservations at JD.com, Inc. Sponsored ADR Class A's Apple Inc. flagship store had exceeded 2.01 million as of October 10, but reservations do not equal transactions; the supply chain says that even with a 30% order increase, total Duo volume still does not exceed 10 million unitsMing-Chi Kuo expects full-year shipments of 7 million to 8 million units, while Counterpoint forecasts about 6 million. User surveys show that 49% of potential consumers cite price as the primary reason for not buying, and 37% say it offers no significantly different functions versus existing phones; the supply side is also under pressure, with Jiemian News learning from people close to the Foxconn supply chain that as of September 17 the Duo's overall yield was only just over 60%. The source of the price increases is memory, and a 47%-48% gross margin guidance This round of price increases was not Apple Inc.'s active choice. According to TrendForce, in the first quarter of 2026, contract prices for general-purpose DRAM rose 55%-60% quarter over quarter and NAND flash rose 33%-38%; in the fourth quarter, conventional DRAM is expected to rise another 10%-15% and NAND's increase is expected to widen to 15%-20%; the estimated contract procurement price for the mainstream 8GB+256GB combination in the first quarter has already risen nearly 200% year over year. The root cause is that AI servers and HBM are siphoning off advanced capacitySamsung, SK Hynix and others are tilting capacity toward higher-margin server memory, squeezing supply of consumer-grade DRAM and NAND. Memory chips' share of the total device BOM has risen from 10%-15% in the past to more than 30%-40%. This cost has already entered Apple Inc.'s financials. In the June quarter, Apple Inc. revenue was $109.4 billion, of which the iPhone contributed $54.252 billion, nearly half of total revenue; gross margin in that quarter was 50.1% (including about 2 percentage points from tariff refunds), and 48.1% on an underlying basis excluding that; gross margin guidance for the September quarter was 47%-48% (including 1 percentage point of refund benefit), and management previously said memory price increases contributed more than 100% of the gross margin compression at the midpoint of guidancein other words, other cost items were improving but were entirely offset by DRAM and memory-related spending. A sector-wide price reset has already occurred: Huawei's nova 16 and Xiaomi's 17 Ultra both adjusted prices on October 9, and the industry expects this round of price increases to continue through the end of 2027. Wall Street is divided The stock price reaction to the "order cuts" was far more violent than to lead times. On October 8, Apple Inc. closed up 1.11% at $340.42 (while the Nasdaq fell 1.3% that day), with its 52-week high of $345.34 set just a few trading days earlier; on October 9, it closed down 1.11% at $336.64, touching an intraday low of $331.22, and based on the intraday low its market value evaporated by about $103 billion, falling to about $4.865 trillion. It is up about 25% year to date and about 38.8% over the past 12 months, trading at about 38.6 times trailing earnings, above the five-year median of 30.98 timesa valuation built on the assumption that the product cycle is functioning normally. J.P. Morgan maintained its "Overweight" rating and $340 price target, acknowledging that consensus sales estimates for the next few quarters may be modestly revised down, but not viewing this as a concern for the entire iPhone 18 cycle. Bernstein's Mark Newman maintained "Outperform" and a 12-month price target of $370, arguing that Apple Inc.'s supply chain overall is performing better than the Android camp, and that the standard iPhone 18 in the first half of 2027 and the iPhone 20th-anniversary product line in the second half can continue to support confidence; but he also cautioned that Apple Inc.'s fourth-quarter shipment progress is slightly behind historical levelsJuly and August combined shipments of 33 million units equal 57% of the market's estimated quarterly total of 58.2 million, below the historical average of 60%. The disagreement is not small: the average Wall Street analyst price target is about $334, with about 58% rating the stock "Buy," 30% "Neutral," and six analysts recommending "Sell." The disagreement on both sides ultimately comes down to a testable question that currently has no answer: whether the 10% price increase can be sustained without hurting shipment volumes. Both J.P. Morgan and Bernstein answer yes, but for somewhat different reasonsthe former relies on average selling price and product mix, the latter on the relay from the base model in the first half of next year and the 20th-anniversary model in the second half. The next reconciliation window is Apple Inc.'s upcoming guidance for the December quarter (holiday season).