Hon Hai Precision Industrial Co (鴻海精密), a major iPhone assembler, was among the Apple Inc suppliers poised to benefit most from the launch of the new iPhone because of hardware upgrades, Daiwa Capital Markets said yesterday.
Daiwa also named Apple’s local camera-module supplier, Largan Precision Co (大立光), and iPhone 4S assembler Pegatron Corp (和碩) among the top five Apple suppliers in Asia to get a boost from the sale of the iPhone 5, scheduled for release early this morning.
“Based on our research, Hon Hai started mass production of the iPhone 5 in late August and is now ramping up production,” Daiwa said in a report released yesterday.
The brokerage said it expected Hon Hai to ship 10 million units of the iPhone 5 this quarter.
“We forecast that Taiwan EMS [electronics manufacturing service] players will make 35 million new iPhones in the fourth quarter of 2012,” Daiwa said.
The brokerage said market concern about production delays for the iPhone 5 might have been overstated.
Because Apple was expected to replace the glass back cover used in the iPhone 4S with a larger, metal back cover, the change would give a boost to Hon Hai’s business as well, the brokerage said. Hon Hai supplies back covers to Apple for its iPhones.
Daiwa also expected Apple to keep selling existing models, the iPhone 4 and iPhone 4S, at about US$100 less per unit to buoy demand. That would mean a sustaining growth driver for local iPhone assemblers Hon Hai and Pegatron, which were forecast to ship 15 million units of those models next quarter, Daiwa said.
The brokerage said the pixel count of the iPhone 5’s camera was likely to remain at 8 megapixels, but Apple has targeted a slimmer form factor and wider aperture, benefiting Largan and Genius Optical Co (玉晶光), which was not rated by Daiwa.
Hon Hai stocks soared 2.88 percent to a four-month high of NT$93 yesterday, while shares of Largan and Pegatron jumped 1.4 percent and 0.93 percent to NT$651 and NT$37.85 respectively.
Genius Optical dropped 0.24 percent to NT$211, underperforming the benchmark TAIEX, which climbed 1.14 percent.
Daiwa gave a “buy” rating on Hon Hai with a target price of NT$90.4 and also rated Pegatron and Largan “buy,” with target prices of NT$64.2 and NT$37.5 respectively.
South Korean suppliers, including iPhone processor and memorychip supplier Samsung Electronics Co and display supplier LG Display Co, were unlikely to see their bottom line boosted by Apple’s new iPhone, Daiwa said.
Apple has been reducing orders from Samsung since the end of last year because of the intensifying patent lawsuits between the two companies and pricing issues, Daiwa said. Japan’s Toshiba and South Korea’s Hynix Semiconductor replaced Samsung as the major NAND flash chip suppliers to Apple, it said in the report.
LG Display Co, one of Apple’s major display suppliers, will see lower revenue share from the iPhone 5 compared with rival Japan Display because of a low yield rate at its new in-cell touch panel production lines, said Daiwa, which rated LG Display “hold.”