Market analysts said investors might have overreacted to recent speculation that Apple Inc might change its casing material for new iPhones, which sent metal casing supplier Catcher Technology Co (可成) shares plunging 11.55 percent last week.
Local media reported that some industry watchers believed Apple might adopt a glass casing for a new iPhone next year in an effort to refresh its product lineup. The glass-casing design would be similar to that of iPhone 4 and iPhone 4S, but with organic light-emitting diode panel technology, reports said.
Sales contribution from the iPhone business reached more than 50 percent of Catcher’s total revenue last year.
The speculation hit Catcher shares harder than other casing makers in Apple’s supply chain because its business has expanded since 2012 after Apple started using metal casings for iPhone 5.
Catcher shares closed at NT$233.5 on Friday in Taipei trading, the lowest in the past two months and lower than their quarterly average of NT$256, according to Taiwan Stock Exchange data.
“Market concerns could be overdone, as any design change for future models is too early to be final,” HSBC Securities Taiwan Corp analyst Carrie Liu said in a report on Tuesday.
HSBC does not rule out the possibility of Apple studying new materials, but thinks it is too early to finalize the casing design at the moment, because it is more than 15 months until next year’s product launch, according to the report.
Liu said even if Apple does change its material from metal to glass next year, the company would still need a metallic frame with complex design to provide structural support and release internal stress if the product were dropped on the ground.
Therefore, crucial mechanical parts suppliers, such as Catcher, would not be easily replaced given their ability to design and manufacture strong components for such a device, Liu said.
Credit Suisse shared a similar view with HSBC, saying that the possibility of Apple adopting a glass casing for iPhones would require a metal frame to offer structural support, as it is still technically difficult to migrate to full glass casing without any metal frame.
Even if Apple overcomes technical barriers to using a full glass casing, Credit Suisse is upbeat about Catcher’s strong ability to handling multiple materials, as the company is by far the second-best casing supplier in the industry, a client note issued on Wednesday said.
At Catcher, chairman Allen Hung (洪水樹) last week said the company is planning to continue expanding its research and development (R&D) and applications in “light-metallic material and multiple other materials” to retain its leading position in the industry.
“Our R&D on new materials include special magnesium alloy, stainless steel, carbon glass fiber, high-strength glass, plastic and other metallic materials,” Hung told shareholders in an open letter released ahead of the company’s annual general meeting slated for May 19 in Tainan.
It was the first time that Horng said in a letter to shareholders that Catcher’s R&D includes applications of glass materials, signs that the company might have invested in developing materials for new iPhones.
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