Apple unlikely to release new iPhone SE in Q2 2017: Report

Apple wants to keep higher gross margins amidst shrinking iPhone sales, as customers anticipate a big iPhone overhaul in 2017.

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Apple released the iPhone SE in March 2016. (Image: Sarah Tew/CNET)

Apple won't release an update to its budget 4-inch iPhone SE in the second quarter of 2017, as it looks to maintain high gross margins, according to well-connected analyst Ming-Chi Kuo of KGI Securities.

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It was speculated Apple would refresh the lineup, aimed at customers who prefer a smaller form-factor, with upgraded internals sometime in March.

According to Kuo's research note (via 9to5mac), Apple won't release an iPhone SE in Q2 to "keep gross margin at a high level and to avoid cannibalization of high-end models."

Kuo expects the iPhone sale slowdown to continue, as customers anticipate the iPhone 8. The analyst forecasted that total iPhone shipment volume will reach 40-50 million units in Q1 2017, lower than the 51.2 million units in Q1 2016.

In a move to further reduce margins, Apple has been applying pressure on smaller suppliers, Kuo added in the research note. Larger suppliers like TSMC and Samsung aren't expected to be moved by Apple.

It's unclear if Apple plans to release an iPhone SE later in 2017.

Apple CEO Tim Cook talked positive about the iPhone SE in the company's 2016 Q3 earnings call with investors:

At its launch we said the addition of the iPhone SE to the iPhone lineup placed us in a better position to meet the need of customers who love a 4-inch phone and to attract even more customers into our ecosystem. In both cases that strategy is working. Our initial sales data tells us the the iPhone SE is popular in both developed and emerging markets, and the percentage of iPhone SE sales going to customers who are new to iPhone is greater than we've seen in the first weeks of availability for other iPhones launched in the last several years.

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