Apple Inc. (NASDAQ:AAPL) is preparing to launch its first foldable iPhone with a deliberately limited supply, positioning the device as a premium scarcity play rather than a volume driver. According to analyst Ming-Chi Kuo of TF International Securities, shipments for the foldable iPhone in the third quarter are projected at just 0.5 million to 1.0 million units. This is a fraction of the 20 million to 22 million units expected for the iPhone 18 Pro and Pro Max models during the same period.
Pricing and Revenue Impact
With a launch price range of $2,300 to $2,500, the foldable iPhone could generate between $1.15 billion and $2.5 billion in retail sales in its first quarter, before accounting for channel effects. While this is a significant sum, it pales in comparison to Apple's overall revenue, which stood at $111.2 billion in the March quarter. The limited launch is reminiscent of the iPhone X strategy, where the device was announced alongside other models but shipped later, creating a sense of exclusivity and pent-up demand.
Supply Chain and Production Targets
Earlier reports from Nikkei Asia indicated that Apple had asked suppliers to prepare for up to 10 million foldable iPhones this year, but Kuo's forecast suggests a more conservative 7 million to 8 million units for the second half of 2026. The gap of 2 million to 3 million units could represent delayed production or a more cautious approach. Apple has components lined up for about 80 million smartphones across new models launching in the second half of 2026, indicating that the foldable is just one part of a broader lineup.
Memory Cost Pressures
The launch comes amid rising memory costs that could pressure Apple's margins and pricing strategy. TrendForce expects conventional DRAM contract prices to rise 13% to 18% in the third quarter from the previous quarter, while NAND Flash contract prices are projected to increase 10% to 15%. These cost increases are driven by tight supply and strong demand from AI applications, which could force smartphone makers to raise retail prices. Higher LPDRAM costs, in particular, may impact handset sales.
China Market Dynamics
Apple's performance in China, a key market, showed mixed signals. During the 618 shopping festival, China's overall smartphone sales fell 13% year-over-year, according to Counterpoint data. Apple's sales dipped 9%, but the company climbed to the No. 2 spot, aided by discounts on the iPhone 17 Pro. In contrast, Xiaomi Corp (HKG:1810) saw a 24% drop, Honor fell 33%, and Huawei gained 19% to capture 21% market share. Counterpoint analyst Ivan Lam noted that Apple's discounts were smaller than last year, and prices were broadly unchanged.
Memory Sourcing and Geopolitical Concerns
Apple is exploring alternative memory suppliers for its devices in China, including ChangXin Memory Technologies and Yangtze Memory Technologies, both of which appear on a U.S. Defense Department list for alleged ties to China's military. Apple currently sources memory from Samsung Electronics Co (KRX:005930), SK Hynix Inc (KRX:000660), and Micron Technology Inc (NASDAQ:MU). The company declined to comment on the talks.
Market Reaction and Analyst Views
Apple shares were indicated at $312.66 ahead of the open, up $4.12 from the previous close. Jefferies analyst Edison Lee maintained a Hold rating on Apple with a price target of $299.88, citing a short-term lift from post-618 discounts in China and strong trade-in offers, but expressing doubt that the pace will last. Lee expects the stock to remain range-bound.
Kuo believes that true demand for the foldable iPhone will become clearer in late 2026 or early 2027, after the initial launch spike subsides and supply catches up. For now, the foldable iPhone is more of a pricing experiment than a bet on unit growth, designed to test the upper limits of consumer willingness to pay for innovation.
