Report

PSA Technology / Materials: Apple iPhone Demand and Outlook

Apple iPhone Demand and Outlook
Tags: Apple (AAPL US), Hon Hai (2317 TT), Samsung Electronics (005930 KS), Japan Display (6740 JP), Nissha (7915 JP), Nitto Denko (6988 JP), Zeon Corp (4205 JP), Sumitomo Chemical (4005 JP)
In the December quarter (2017) Apple (AAPL US) sold 77.3mil iPhones, which was down slightly on the 78.3mil sold a year earlier. This was below our expectation of 80mil units and we were probably mid-range (having been below consensus originally). However, ASPs came in higher than we had expected (US$796 vs $780). This is either down to the iPhone X doing better than we thought, or – given the iPhone X’s production problems – is more likely down to the iPhone 8 doing better relative to the iPhone 7 than originally thought. However, it is difficult to assess how much of the weakness was down to demand and how much was down to supply.
In this overview, Technology analyst Pelham Smithers and Materials analyst Joel Scheiman discuss the outlook for Apple’s iPhone. They draw on Hon Hai’s (2317 TT) sales figures; review market concerns related to production and demand issues for the iPhone X; discuss China shipments and present estimates for the split on OLED vs LCD phones, with a read across to Japan’s Apple supply chain names.

Underlyings
Apple Inc

Hon Hai Precision Industry Co. Ltd. GDR

Japan Display Inc.

Japan Display is engaged in the development, production and sale of small- and medium-sized display devices and related products. Co.'s display devices are mainly used for smartphone, tablet, in-vehicle equipment, medical equipment, game machine, and digital cameras, as well as wearable applications such as sports watches, healthcare equipment and action cameras. Co. provides flat panel displays including low temperature poly-silicon LCD for ultra-high resolution, IPS (In-Plane Switching) for wide viewing angle and high picture quality, WhiteMagic™ for power-saving, and Pixel Eyes™ for thin and light touch functionality.

Nissha Co.Ltd.

Nissha is engaged in the production of general printed matter in the fields of art and commercial printing as well as surface decoration of products technology. Co. manufactures IMD and IML, metallized paper, and heat transfer foils used for simultaneous molding and printing of plastic products and decorations for mobile phones, notebook PCs, automotive interiors and home appliances; and manufactures functional devices such as film based Touch Sensors "Fine Touch" used in tablet devices, smartphones, game consoles, industrial equipment and automotive. Co. also manufactures and sells its own brand products to medical institutions and provides marketing and sales promotion materials.

Nitto Denko Corp.

Nitto Denko and its subsidiaries are mainly engaged in the manufacture and sale of industrial materials, electronic materials and functional materials. Co.'s principal products include junction materials, surface protective materials, sealing materials, packing materials, and machinery; liquid crystal display ("LCD")-related materials, semiconductor-related materials, printed circuits materials and electronic processing materials; and medical-related materials, macro-molecular separation membranes used in seawater desalination and engineering plastic materials.

Samsung Electronics Co. Ltd.

Samsung Electronics is engaged in the manufacture and sale of electronic goods, communication products, semiconductors, telecommunication equipment, home appliances and other similar products. Co.'s products are mobile phones, MP3 Players, DVD players, video equipment, including Blu-Ray, TVs and VCRs; household appliances, including microwave ovens, refrigerators, home air conditioners, washing machines, ultrasonic humidifiers, dehumidifiers, vacuum cleaners and other small electrical goods; audio equipment, including semiconductors, information systems, and computers; miscellaneous parts; other products, including automatic vending machines, refrigerated display cases and electric tools.

Sumitomo Chemical Co. Ltd.

Sumitomo Chemical is a chemical manufacturing company. Co.'s business is comprised of 5 sectors: Petrochemicals & Plastics Sector, Energy & Functional Materials Sector, IT-related Chemicals Sector, Health & Crop Sciences Sector, Pharmaceuticals Sector and Others. Co. is engaged in the manufacture and sale of inorganic and organic chemicals, synthetic fiber materials, metal acrylate, alumina and aluminum products, petrochemical, synthetic resin and rubber products, optical goods, color filters, materials for semiconductors, electronic materials, agrochemicals, fertilizers, agricultural materials, pesticide, dietary additives, pharmaceuticals and radioactive diagnostic products.

Zeon Corporation

Zeon is the parent company of a group engaged in the manufacture and sale of chemical products. Along with its affiliates, Co. operates in three business segments: elastomer, specialty materials, and others. Co.'s principal products include synthetic rubbers; synthetic latices; chemicals, such as C5 petroleum resins and thermoplastic elastomers; specialty chemicals, such as synthetic aroma chemicals and industrial chemicals; information materials, such as elastromics materials and polymerized toners; specialty plastics, such as cyclo-olefin polymers; optical materials; medical products; RIM formulations; RIM products; paints; butadiene extraction technology; housing materials; and others.

Provider
Pelham Smithers Associates Ltd
Pelham Smithers Associates Ltd

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries. 

The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012. 

Analysts
Pelham Smithers

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