What does Amazon.com Inc’s first smartphone mean for Taiwanese supply-chain companies?
The quick answer is “limited revenue contribution” to most suppliers, Yuanta Securities Co (元大證券) analyst Jeff Pu (蒲得宇) said.
However, in the longer term, it means using multiple cameras at the same time may be a popular production trend, which would benefit the local camera supply chain, he said yesterday.
“Due to its closed ecosystem [Fire OS] and potentially slow rollout into non-US countries, our supply chain check suggests a shipment volume of about 3 million in the second half of 2014,” Pu wrote in a note to clients after Amazon on Wednesday unveiled its long-awaited Fire Phone in Seattle.
The US online retailer has been working on a smartphone of its own for some time, running a variant of the Kindle Fire Android operating system.
Two years ago, Pu forecast the Taiwanese supply chain would be able to mass produce Amazon smartphones in the second quarter of last year, but the action did not take off until this year, and the market is now dominated by Apple Inc and Samsung Electronics Co.
“Although our checks suggest a limited shipment volume outlook, we expect the multi-camera design trend to emerge, benefiting camera-related suppliers,” Pu said yesterday, referring to video-graphics-array (VGA) cameras tucked into all four corners of the front of Fire Phone’s 4.7-inch 3D-capable screen.
“In addition to the decent rear camera, we believe the major design breakthrough of the camera is those four VGA cameras,” he wrote.
As Pu said in his note, FIH Mobile Ltd (富智康), a handset manufacturing arm of Hon Hai Precision Industry Co (鴻海), appears to be the biggest beneficiary of the Amazon handset launch because it might be the sole assembler of Fire Phone and make about 15 percent of its total sales in the second half of the year from the smartphone.
For smartphone camera lens supplier Largan Precision Co (大立光), the revenue contribution from Amazon might be smaller than that from Apple Inc’s iPhone, Yuanta Securities said.
However, the industry trend of multi-camera for either front or rear design would help the company receive more orders from Chinese companies, the brokerage said.
The stronger smartphone resolution migration from 5 megapixel to 8MP and 10MP and above in China, as well as contribution from the ramp-up of production of the iPhone 6, would likely boost Largan’s revenue for this quarter to growth of 46 percent quarter-on-quarter and 71 percent year-on-year, Macquarie Capital Securities Ltd Taiwan analyst Tammy Lai (賴敏敏) said on Tuesday in a client note.
As for other component makers, Yuanta Securities said handset peripheral products maker Primax Electronics Ltd (致伸) would see about a 5 percent sales contribution in the second half from Amazon, while LCD panel maker Innolux Corp (群創), touchpanel maker General Interface Solution Ltd (英特盛), camera module supplier Lite-On Technology Corp (光寶), connector maker Cheng Uei Precision Industry Co (正崴) and flexible printed circuit board maker Zhen Ding Technology Holding Ltd (臻鼎) would also benefit from Fire Phone.
Largan shares rose by the daily maximum to close at NT$2,190 in Taipei trading yesterday, remaining the highest priced stock on the local bourse.
Macquarie, which rates the stock an “outperform,” has raised its target price on Largan to NT$2,460 from NT$2,060.