KGI Sees No Significant Apple (AAPL) iPhone OLED Ramp Up Until Q4; Says Market Reaction to 3D Sensing Will Be Major Factor

September 11, 2017 10:36 AM EDT
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KGI analyst Ming-Chi Kuo offered his latest predictions for Apple's (NASDAQ: AAPL) new iPhone ahead of tomorrow's event.

First, Kuo said he expects OLED iPhone will enter mass production in mid-September, but no significant ramp up until 4Q17F. "Due to component supply constraints, we estimate current production of the OLED iPhone at less than 10k units per day, which means the model will remain in severe short supply for a while," Kou commented. "Furthermore, we estimate that the gold version of the OLED iPhone will encounter some production problems and will initially be available only in extremely low volume. There is even a chance that the gold version will go on sale at a later date than the other versions. However, we believe these shipment delays will have a limited impact on the shares of Apple and its supply chain members."

He said key things to watch for at the event are OLED iPhone price & whether the 3D sensing feature offers an innovative user experience. They believe the key applications for 3D sensing in the initial stage are: (1) successful replacement of fingerprint recognition with facial recognition, which means Apple has to win over consumers by demoing a smooth-running, easy-to-use and secure feature; and (2) improved selfie quality. Consensus is that the OLED iPhone will be priced at US$1,000. As a result, the announcement of pricing shouldn’t be a surprise.

Kou said the market reaction to 3D sensing feature will be a big factor in Apple and supply chain share performance. "The market has high expectations for the OLED iPhone's all-new form factor design and its 3D sensing functionality," he commented. "We believe whether or not 3D sensing can deliver an innovative user experience will significantly affect the share price performance of Apple and its supply chain members. If market opinions are mixed after the media event, then we’ll have to wait until shipments begin to see if consumers like what the OLED iPhone has to offer."

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