Susquehanna Shares Key Insights on Apple Inc. (AAPL) Following Meetings with Asia Supply Chain

Apple Could See a Robust Tailwind in 2018 on iPhone 8 OLED Production Ramp Up, Says Susquehanna


After meeting with Apple Inc. (NASDAQ:AAPL) suppliers in Korea and Taiwan, Susquehanna analyst Mehdi Hosseini is angling for promising growth gains waiting in the wings for the tech titan.

Apple could be hitting the lift button on its iPhone production for next year, and even if estimates for the second half of the year stand at roughly 90 million units, Hosseini points to the first quarter of 2018. Here, says the analyst, it looks as if the titan is bumping its production expectations to the tune of a 5 million increase: 55 million iPhones. While Hosseini sees the OLED version taking half of the iPhone units for 2017, he predicts a possible jump to 70% by 2018.

Three key points for the analyst on back of his glance into Apple’s Asia supply chain:

  1. The OLED model will no longer come with a fingerprint sensor. Rival Samsung could be ousted by the titan’s facial recognition on a payment playing table.
  2. Apple’s manufacturing ecosystem is working on 200 million OLED-based iPhones for building and shipping in 2018. Each one of this army of OLED iPhone units will boast structural light-based 3D Sensors.
  3. HomePods, Apple’s smartphone speaker offensive punch at rival Amazon’s Echos are to be built and shipped in the fourth quarter. By the end of the year, 10 to 15 million HomePods will be ready to stride into the market, complete with a WiFi option.

“Looking deep into 2018, checks suggest that Apple will use OLED display for a broad range of iPhones. Current forecasts suggest Apple is planning to have 200M iPhones with OLED display manufactured and shipped in 2018. All iPhones with OLED display in 2018 will have 3D Sensing. However, Apple’s competitors may have a hard time securing 3D Sensor manufacturing capacity. Some of this is due to the fact that the entire 3D Sensing manufacturing eco-system is still not mature, while its exact use and application in smartphones will be pretty much driven by Apple (and something no one will ultimately know until the i8-OLED model is introduced to the public). Current forecasts suggest the manufacturing eco-system for 3D Sensors in 2018 can accommodate 150M smartphones (outside of Apple). But again, lack of standardization presents a headwind for Apple’s competitors to incorporate 3D Sensing in their smartphones as successfully as Apple is expected to do,” concludes the analyst.

TipRanks analytics demonstrates AAPL as a Buy. Out of 34 analysts polled by TipRanks in the last 3 months, 25 are bullish on Apple stock while 9 remain sidelined. With a return potential of 4%, the stock’s consensus target price stands at $170.42.

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