iPhone X
Demand for iPhone X components has weakened. Reuters/Peter Nicholis

Morgan Stanley analysts claim Apple is doing well in China, according to a note distributed to investors on Wednesday seen by Business Insider. However, a report from China’s DigiTimes says Apple suppliers will lower component manufacturing for the iPhone X.

The reports come after Apple released the iPhone 8 in September and the iPhone X in November before the holiday season kicked off.

The Morgan Stanley analysts said Apple’s latest lineup will be able to switch Android users to iPhones. They also said the company will be able to keep its current customers when they upgrade their devices.

The analysts said the Apple will rack up $307 billion in revenue in fiscal 2018. That figure is much higher than Apple’s sales in 2017, which were $229.2 billion.

Morgan Stanley analyst Katy Huberty wrote:

"Data through the 4 week period ending December 17th shows that Apple continues to gain share of the active base of smartphones in China (counter to the consensus view that Apple is losing share), capturing 21.3% market share, 250 basis points higher than their closest competitor. [...] Given these strong and accelerating data points for the iPhone, and iPhone X in particular, we remain confident in our thesis that Apple is turning the corner in China and growth will accelerate in the quarters to come.”

While Morgan Stanley gave Apple an “overweight” rating and a $200 price target, the firm admits its view of the Cupertino company is not similar to that of other Wall Street analysts.

Credit Suisse analysts wrote this week that they believe production of the iPhone X was cut to 25 million units from a previous target in the March quarter of 31 million units. However, the firm thinks Apple is making more iPhones now than it did in 2015, during the company’s previous “super cycle” of smartphone sales. That means customers may upgrade their devices to the new iPhones this time around. Meanwhile, Zhang Bin of Sinolink Securities says now that the first wave of demand has been fulfilled, the $1,000 starting price of the iPhone X may weaken demand in the first quarter.

Apple iPhone Demand In China

Experts are also concerned about China’s smartphone market, which has seen a lower demand. Shipments of smartphones decreased 10 percent in the first 11 months in 2017, according to Chinese financial media group Caixin. The same outlet said on Tuesday that the demand for iPhone Xs has become so slow that the devices are now selling for a lower price on major retailer site JD.com.

Meanwhile, DigiTimes said on Wednesday that some Apple suppliers are temporarily halting their production in February. The move is due to the low order for the 2017 iPhone lineup components, supply chain sources told the news site.

The report said component orders for the latest iPhones will be 15-30 percent less than expected for the first quarter. The decrease is mostly due to seasonal factors, but some sources told the site it’s because the slower-than-expected sales of iPhone 8 and iPhone 8 Plus have ruined the momentum for the iPhone X.