Early pre-order data of Apple Inc’s new iPhones due to be released tomorrow show that consumers generally favor the larger-screen version, which is likely to benefit certain suppliers in Taiwan, CIMB Securities Ltd said yesterday.
The Hong Kong-based brokerage said the preference for the 5.5-inch screen iPhone 6 Plus over the 4.7-inch screen iPhone 6 would benefit system assembler Hon Hai Precision Industry Co (鴻海精密), camera lens supplier Largan Precision Co (大立光) and metal casing manufacturer Foxconn Technology Co (鴻準).
“In terms of components, we expect both Largan and Foxconn Tech to benefit most if consumers favor the iPhone 6 Plus, given that they have a greater share of the [components of the] high-end iPhone 6 Plus,” CIMB analysts led by Wang Wanli (王萬里) said in a research note.
Based on the CIMB’s supply-chain checks, Hon Hai is iPhone 6 Plus’ sole system assembler, Largan is the primary lens supplier of the iPhone 6, but sole supplier of the iPhone 6 Plus, while Foxconn Technology has a 50 percent metal casing order allocation for the iPhone 6 Plus.
There are debates if big screens suit consumers better, but CIMB said most consumers might consider the iPhone 6 Plus a bargain because the price difference between the two models is only US$100, and the iPhone 6 Plus offers better resolution, larger battery capacity and a camera lens supported with an optical image stabilizer (OIS).
The brokerage said the new iPhones could be the best-selling products in the iPhone’s history, given that the 4 million units ordered on the first day pre-orders were made available far exceeded the 2.5 million units booked for the iPhone 5S during the first week of pre-orders for the model last year.
“Although it is still too early to forecast consumer preferences, we believe it is safer for investors to focus on the iPhone 6 Plus supply chain companies because the share price downside risk of the iPhone 6 supply chain is higher,” Wang and his colleagues wrote.
The estimate is due to a sensitivity analysis showing that companies without iPhone 6P exposure — such as metal casing manufacturer Catcher Technology Co (可成) and Pegatron Corp (和碩), another system assembler — are more vulnerable to this change in consumer preference, CIMB analysts said.
However, CIMB said its major concern is not about end-market demand, but rather the potential imbalance in supply and demand in the second half of this year.
CIMB said if Apple is unable to fulfill the incremental iPhone 6 Plus demand in upcoming months due to potential yield and tight component supply issues, both the iPhone 6 and iPhone 6 Plus supply chains would be affected, with metal casing makers likely suffering the most.
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