Apple has "significant iPhone upgrade potential" in China on the eve of the new iPhone's release, Morgan Stanley wrote in a report on Wednesday.
More than 68 percent of iPhones in China have been in use for at least two years, the investment bank's analysts said, a figure that's up 8 percentage points from last year and more than 20 percentage points from 2017.
"In our view, this speaks to the significant iPhone upgrade potential in China, the largest in at least 4 years, and helps support our bullish call that iPhone shipment growth can meaningfully accelerate in FY21 (fiscal year 2021)," Morgan Stanley wrote.
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The iPhone upgrade cycle is influenced by a number of factors, including the expectation that Apple's next-generation iPhone will support 5G, the launch of the cheaper second-generation iPhone SE, and "expectations for stable pricing" for the new device.
In addition, Morgan Stanley believes that the "increased adoption of trade-in and financing programs" will also help Apple.
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Other Wall Street analysts are also optimistic about the upgrade cycle of Apple's next-generation iPhone.
Daniel Ives, an analyst at Wadebush Securities, believes that the next-generation iPhone is "once in a decade opportunity over the next 12-to-18 months."
“We estimate roughly 350 million of Cupertino’s 950 million iPhones worldwide are in the window of an upgrade opportunity,” Ives said in a note published earlier this month.
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