The next generation iPhone 5, which Apple Inc plans to release this week, could boost not only the tech giant’s bottom line, but also the overall US economy.
Sales of the new iPhone could add between a quarter and a half percentage point to fourth-quarter growth in the US, JPMorgan chief economist Michael Feroli said in a note to clients on Monday.
Such an impact would be significant.
Photo: EPA
“Calculated using the so-called retail control method, sales of [the] iPhone 5 could boost annualized GDP growth by US$3.2 billion, or US$12.8 billion at an annual rate,” Feroli wrote.
That 0.33 percentage-point boost “would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent,” he wrote.
JPMorgan analysts expect Apple to sell about 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about US$600.
With about US$200 in discounted import component costs, the government can factor in US$400 per phone into its measure of GDP for the fourth quarter.
Feroli said that the estimate of between a quarter to a half point of annualized GDP “seems fairly large, and for that reason should be treated skeptically.”
However, he added: “We think the recent evidence is consistent with this projection.”
Feroli said that when the last iPhone was launched in October last year, sales significantly outperformed expectations.
“Given the iPhone 5 launch is expected to be much larger, we think the estimate mentioned ... is reasonable,” Feroli wrote.
According to a recent Reuters poll of Wall Street dealers and economists, the US economy is forecast to expand by 2.0 percent next year — down slightly from estimates this summer.
Apple is hosting an event in San Francisco today. The topic wasn’t disclosed, but the e-mail invitation contains a shadow in the shape of a “5” — a sign that the iPhone 5 is coming. Sales usually begin a week or two after such an announcement.
The new phone, to be introduced by CEO Tim Cook, will probably have a new hardware design, including a bigger screen and thinner body, as well as new mapping software and compatibility with speedier next-generation data networks. Analysts predict the iPhone may be among the biggest consumer-electronics releases in history. Still, Apple’s reliance on the device leaves Cook little margin for error.
“The iPhone is the make-or-break product for Apple,” said Sarah Rotman Epps, a mobile-phone industry analyst at Forrester Research. “Apple has the undeniable lead, but to stay on top they need to keep innovating.”
Apple could sell as many as 10 million iPhones by the end of this month alone, according to Gene Munster, an analyst at Piper Jaffray Cos. By contrast, it took Samsung Electronics Co about 50 days to sell 10 million of its flagship Galaxy S III smartphone.
“Until they do something really unimpressive, which I don’t see happening this time around, Apple has a serious hit on its hands,” said Ramon Llamas, senior research analyst at International Data Corp.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS