Nov 08, 2016 06:48 AM EST

Analyst Say Apple Is Unlikely To Refresh iPhone SE in 2017, To Boost Gross Margin

An analyst is saying that Apple, Inc. won't likely apply an annual refresh to its affordable small-form factor, the iPhone SE. This is due to the pressure of maintaining high gross margins, amidst the flagging sales that the iPhone is experiencing.

According to AppleInsider, well-connected analyst Ming-Chi Kuo said in a note to investors that Apple will be prolonging the lifecycle of the iPhone SE. He said that this is Apple's bid to boost margins and minimize the cannibalization of the iPhone 7.

Apple's downward revision of its anticipated gross margins gave birth to speculations that the company will hold off on revamping the iPhone SE. The 4-inch phone first debuted on March 2016, offering many of the iPhone 6's features in a smaller device.

In Apple's recent quarterly earnings conference call, the company said that their anticipated gross margin for the three-month ending in December will be between 38 percent and 38.5 percent. This is below the consensus of a more than 39 percent and way below the 40.1 percent margin in 2015.

MacRumors reports that Kuo also forecasted that the lack of an iPhone SE refresh will affect the shipment volume of the iPhone in the first half of 2017. He expects shipment volume to decline in 2017 as 2016's volume came in high due to the "upbeat demand for the iPhone SE."

What Apple will do instead, according to Kuo, is to pressure the component makers to drop their prices in a bid to maintain margins. He expects that the iPhone's component makers will lower their prices in November or December.

It's still unclear though whether the iPhone SE will be refreshed in 2017. Kuo didn't mention any plans that Apple has beyond the second fiscal quarter of 2017, which suggest that the 4-inch smartphone could still be refreshed later in the year.

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