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Apple's Foldable iPhone May Contribute $14 Billion to December Quarter Revenue, Morgan Stanley Says

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Apple's Foldable iPhone May Contribute $14 Billion to December Quarter Revenue, Morgan Stanley Says

Apple's (AAPL) upcoming debut foldable iPhone could contribute about $14 billion to the company's December quarter revenue, while projected smartphone price hikes are likely to be "a critical test" of the technology giant's pricing power, Morgan Stanley said in a note e-mailed Wednesday.

The company is expected to launch its much-anticipated foldable iPhone at its "Surprise and Shine" event scheduled for Sept. 9. This would bring Apple into competition with major rival Samsung in the foldable smartphone space. Apple's new chief executive, John Ternus, will lead the event.

"This may be Apple's most consequential iPhone launch since iPhone X," Morgan Stanley said in a note to clients. "Apple's first foldable and the largest iPhone price increases in years creates a critical test of pricing power."

The brokerage expects about 6.5 million foldable iPhone shipments in the December quarter, translating to roughly $14 billion of revenue, or 16% of total iPhone sales for the period, according to the note.

"Speaking of supply, our checks continue to point to (7 million to 8 million) foldable iPhone builds in (the second half of 2026) and up to 20 (million) builds over the first-generation product cycle, which essentially doubles the foldable smartphone market in (2027)," Morgan Stanley wrote.

Apple and other tech giants are grappling with a global memory chip shortage, which has driven component prices higher. Apple recently increased prices for MacBooks and iPads.

"Combined with our survey work indicating strong foldable interest among iPhone users, notably in China, we believe the device is likely to sell out quickly given what we expect to be strong initial demand and constrained early supply," Morgan Stanley said.

The brokerage continues to expect the starting price of the iPhone 18 Pro and Pro Max to be increased by $200, with potentially larger increases at higher storage tiers, taking into account higher costs of memory chips.

While Apple upgrades its iPhone processor every year, the upcoming event will mark its first adoption of Taiwan Semiconductor Manufacturing's (TSM) 2-nanometer process technology, according to the note.

"Apple needs the iPhone models launched next week to deliver demand closer to in-line with the supply chains view of iPhone builds in (the second half of 2026) and into (the first half of next year)," Morgan Stanley said. "If not, the next three months could be 2022 deja vu."

In July, Apple reported strong fiscal third-quarter results amid momentum in iPhone sales, though the company missed estimates for iPad and services revenue.

Price: $325.44, Change: $+0.31, Percent Change: +0.09%

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