Apple Inc’s iPhone installment plan in the could shorten the iPhone replacement cycle and expand its second-hand market, which would benefit its main assembler, Hon Hai Precision Industry Co (鴻海精密), in the long term, as it also runs Apple’s iPhone trade-in scheme in China, analysts said.
The US company on Sept. 9 announced a new iPhone installment program for iPhone users keen to renew their iPhone every year.
The monthly payment plan — the lowest price starting at US$32 per month — allows Apple’s customers to buy a new iPhone every 12 months without having to enter a two-year binding contract with US telecom operators.
“The installment program could speed up the iPhone replacement cycle from about two years to one year, further spurring demand for new iPhones,” CIMB Securities Ltd analyst Felix Pan (潘俊宏) said in a note released on Thursday.
Yuanta Securities Investment Consulting Co (元大投顧) said if Apple later extends the installment program to other regions, there would be a significant boost for iPhone demand.
As Hon Hai is iPhone’s main assembler, it is expected to benefit the most from the potential increase in demand, Yuanta analyst Vincent Chen (陳豊丰) said in a note on Thursday.
Apple’s monthly installment plan could also expand second-hand iPhone market and help Hon Hai’s iPhone trade-in scheme in China, analysts said.
Currently, Hon Hai is the sole iPhone assembler handling the used iPhone trade-in program in China, in charge of logistics, refurbishment, trade-ins, recycling and distribution.
“Hon Hai could have a tighter relationship with Apple through the second-hand iPhone business,” Chen said.
Pan said Hon Hai’s role has shifted from a pure manufacturer to a service provider.
“As the iPhone upgrade program is initially available in the US, we forecast that every 5 percent of the iPhone user base in the US market subscribing to the monthly installment plan will increase Hon Hai’s sales and earnings by 2.4 percent and 1.2 percent, respectively,” Pan said, citing CIMB’s earnings estimate model.
Although iPhone order allocation to Hon Hai might drop from 82 percent for iPhone 6 models to 70 percent for the iPhone 6S, the impact of the order contraction should be smaller than expected.
That is because both the 5.5-inch and rose-gold models are exclusively supplied by Hon Hai, the analyst said.
The CIMB analyst expects Hon Hai to enjoy a strong second half after the launch of the new iPhone, with sales this quarter set to grow 6 percent quarterly to NT$1.02 trillion (US$30.64 billion) and rise 41 percent subsequently to NT$1.45 trillion in the next quarter.
Semiconductor stocks on Friday took a beating after a grim profit warning from Idaho-based Micron Technology Inc sparked fresh worries about the US’ earnings power as the country is potentially heading for a recession. Despite a broader stock market rally, the Philadelphia Stock Exchange Semiconductor Index dropped 3.8 percent after Micron, the largest maker of memory semiconductors in the US, flagged that demand was cooling for chips used in computers and smartphones. The index — which is home to US chip giants Advanced Micro Devices Inc and Nvidia Corp, as well as Micron — is down 38 percent this year. Historically, semiconductor
WHOLLY OWNED SUBSIDIARY: Costco Wholesale said it expected the purchase of the remaining 45 percent stake to add 1 to 1.5 percent to its earnings per share US-based Costco Wholesale Corp on Thursday said that it had purchased the remaining 45 percent stake in Costco President Taiwan Inc (台灣好市多) for US$1.05 billion, making the local company a fully-owned unit. “We estimate that the purchase would add about 1 to 1.5 percent to [our] earnings per share,” Costco said in a statement. Costco President Taiwan was established as a joint venture with Kaohsiung-based President Group (大統集團), which held a 45 percent stake. Since the first Costco store opened in Kaohsiung in 1997, 14 outlets have been set up in Taiwan, company data showed. PROFITABLE Three Costco stores in Taiwan — in Taipei’s Neihu
MOBILITY SOLUTIONS: Tata Technologies’ participation marks more progress in Hon Hai’s efforts to expand its ecosystem through the platform, the Taiwanese firm said India’s Tata Technologies Ltd has become the latest member of Hon Hai Precision Industry Co’s (鴻海精密) MIH Open Platform to jointly develop sustainable mobility solutions for customers worldwide, the Taiwanese company said yesterday. It might include embedded and electrical, electric platform development and battery management system solutions, among others, Hon Hai said. Tata Technologies’ participation marks more progress in Hon Hai’s efforts to expand its electric-vehicle (EV) ecosystem through the MIH platform, it said. The open platform has about 2,380 members around the world, with an aim to jointly develop EV ecosystems and shrink the time to market for products. Hon Hai made the
SOARING PROFITS: Semiconductors and shipping have knocked automaking and construction out of the 10 highest paying industries, stock exchange data showed Mobile phone chip designer MediaTek Inc (聯發科) posted an average of NT$5.15 million (US$173,249) in annual compensation for non-managerial employees last year, marking the highest among all firms listed on the Taiwan Stock Exchange (TWSE), exchange data showed. That is a 66 percent increase from the company’s average compensation of NT$3.08 million in 2020, as its earnings per share (EPS) expanded from NT$26.01 in 2020 to NT$70.56 last year. That is also three times higher than the average compensation of NT$1.7 million in the nation’s semiconductor industry, the data showed. The increases helped MediaTek advance its ranking from third in 2020, replacing