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Investing.com -- Apple’s upcoming iPhone launch could face demand risks if the company raises prices, UBS analysts warned in a note.
Apple (NASDAQ:AAPL) is set to hold its “Awe Dropping” event on Tuesday, September 9, where it is expected to unveil its latest hardware, including the iPhone 17 lineup.
UBS analysts said that any implicit or explicit increase would risk curbing demand at a time when smartphone elasticity remains high.
The team, led by David Vogt, pointed to Europe as a cautionary example. Apple raised prices in 2022 in response to higher component costs and a strong U.S. dollar, with hikes of €100 in Germany and £70 in the U.K.
“iPhone price increases in Europe resulted in softer demand beginning late in 2022 lasting through late 2023 highlighting the risk of a price increase,” the analysts wrote. That softness persisted for nearly a year.
“Therefore, we flag the risk of demand destruction if iPhone prices are either implicitly or explicitly raised,” the analysts added.
The team said some investors expect Apple could move storage on the Pro variant to 256GB, similar to when the Pro Max launched in September 2023. Such a step would effectively lift the starting price, which Vogt warned would pose “downside risk to iPhone demand in our view given elasticity.”
UBS is forecasting a subdued September quarter for iPhone shipments at 52 million units, up 8% quarter-on-quarter but only 1% year-on-year, as June benefitted from heavier promotions, better upgrades, and pull-in.
While new hardware such as the expected iPhone Air may refresh the lineup, UBS sees little chance of a material boost to demand without significant software upgrades or AI features.
“Like the impact of new hardware, we do not anticipate a pick-up in iPhone demand given stand-alone AI applications are already available in the smartphone market,” the analysts said. The bigger swing factor, it warned, remains price.
UBS maintained its Neutral rating and a $220 price target on Apple shares.