Local iPhone supply chain partners including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Hon Hai Precision Industry Co (鴻海精密) are likely to benefit from the new iPhone release schedule Apple Inc could adopt next year, JPMorgan Securities analysts said in a report on Monday.
The US company is expected to change its iPhone release strategy to launch new devices twice a year, a major change from its usual one launch per year, JPMorgan analysts said.
Apple is likely to introduce a new lower-end phone with a 4.7-inch LCD in the first half of next year, followed by four new iPhones in the second half, which would likely have OLED displays — one with a 5.4-inch screen, one with a 6.7-inch screen and two with 6.1-inch screens, the report said.
The four new iPhones likely to be released in the second half of next year are expected to support 5G, with two of them supporting both millimeter-wave and sub-6 gigahertz (GHz) technologies, and the other two supporting sub-6GHz only, the report said.
JPMorgan raised its expected iPhone shipments by 1 million units to 75 million units for this quarter, saying that 190 million units would be shipped this year.
For the first quarter of next year, shipments would increase 26 percent to 45 million units, from 43 million units a year earlier, thanks to brisk demand for the iPhone 11 series, the report said.
For the full year next year, iPhone shipments would grow 7 percent year-on-year to 203 million units from 199 million, thanks to strong product portfolios in the second half of the year, it said.
Against this backdrop, Apple’s supply chain partners would benefit from “a stronger product cycle in 2020 and in the first half of 2021, driven by 5G, better camera spec and market share gains,” JPMorgan analysts said.
“We think less seasonality should help the supply chain to reduce margin volatility thanks to easier supply chain management, in terms of components, labor, overhead costs and [likely] utilization rate,” they said.
Companies “that have higher fixed costs and lower margin usually suffer more from volatile seasonality. They are hence potential beneficiaries of smooth seasonality,” they added.
JPMorgan said it holds a positive view on TSMC, the sole processor supplier for iPhones, and Hon Hai, a key iPhone assembler, as well as Win Semiconductors Corp (穩懋半導體).
Camera lens suppliers Largan Precision Co (大立光) and Genius Electronic Optical Co (玉晶光) are also among JPMorgan’s favored shares, so are China’s Luxshare Precision Industry Co (立訊精密), Japan’s Alps Electric Co, Murata Manufacturing Co and Sony Corp, because of iPhone’s new product cycle, it said.
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