Apple analyst Ming-Chi Kuo at KGI Securities is out today with a new note concerning demand for the new iPhone 7 and iPhone 7 Plus. Ultimately, Kuo says that shipment volume for the iPhone 7 Plus is better than expected, though iPhone 7 shipment volume is lower than that of the iPhone 6s.

One contributing factor to iPhone 7 Plus shipments being higher than expected is the Galaxy Note 7’s exploding battery recall. Samsung’s recall has pushed users to look for another option if they want a large-screen smartphone. Kuo also notes that the iPhone 7 Plus’s dual-camera feature has been well-received, thus helping early shipments of the device.

In terms of color choices, a survey conducted by KGI shows that Jet Black is the most popular color option. Jet Black apparently accounted for roughly 30 percent to 35 percent of pre-orders worldwide, while in China it accounted for 45 percent to 50 percent of pre-orders. The 128GB model has also been the most sought after choice thus far as well, according to the survey.

In terms of the split between iPhone 7 and iPhone 7 Plus, Kuo claims that pre-order numbers of the iPhone 7 Plus roughly equaled that of the iPhone 7, again largely due to the issues surrounding the Galaxy Note.

Kuo also notes in his release today that the early shortage surrounding the iPhone 7 and iPhone 7 Plus is not entirely due to market demand. The Jet Black model is signifincantly more challenging for Apple to manufacture, offering a yield rate of 60 percent to 70 percent. Additionally, the iPhone 7 and iPhone 7 Plus launched in 28 countries on day 1 this year, versus 12 last year, again contributing to the supply shortage.

Finally, Kuo predicts that, despite the strong performance of the iPhone 7 Plus, Apple will see a year-over-year decline in shipments of its new device. While KGI is increasing its estimates from 60-65 million to 70-75 million, iPhone 7 and iPhone 7 Plus shipments are ultimately expected to be lower than that of the iPhone 6s and iPhone 6s Plus shipments last year.

The iPhone 7 Plus shipment volume outlook is better than expected because of the recall of Samsung’s (KR) Galaxy Note 7 due to exploding batteries and positive reception of the iPhone 7 Plus’s dual-camera feature; we believe the recent share price gains for Apple and its supply chain members mean that these positives have already been priced in. We forecast iPhone 7 2016 shipment volume will be lower than that for the iPhone 6S in 2015. The initial iPhone 7 supply shortage was due to better-than-expected demand for the iPhone 7 Plus and undersupply of jet black casings caused by a poor production yield rate of 60-70%; overall demand is still weaker than that for the iPhone 6S.

Apple itself is forecasting slower numbers this year than last. The company will not release first weekend sales numbers for its new iPhone lineup, while it also predicts its earnings slow down to continue this quarter.

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