Ming-Chi Kuo Says iPhone X Supercycle Won’t Really Happen Until 2018

For months, many Wall Street analysts have predicted the iPhone X will drive a significant number of existing iPhone users to upgrade. The latest word from KGI Securities analyst Ming-Chi Kuo, however, suggests the so-called "supercycle" won't truly gain momentum until 2018 due to multiple factors.


Namely, Kuo said the TrueDepth camera system's reported production issues will be "significantly addressed" in 2018. He also believes new iPhone models launched in 2018 will enjoy a longer sales period than those unveiled in 2017, with next year's lineup likely to retain many of the iPhone X's appealing features.

Here's the excerpt from Kuo's research note obtained by MacRumors today:
The market generally refers to 2017 as the super cycle of the iPhone, but we think the real super cycle will be in 2018 for the following reasons: (1) TrueDepth Camera's production issues will be significantly addressed in 2018F; (2) new models launched in 2018F will enjoy a longer sales period than those unveiled in 2017; and (3) the product mix, specifications and designs of new iPhone models from 2018F will be more competitive. We estimate that for 2017, iPhone shipments will come in at 210-220mn units, which should grow to be 245-255mn units in 2018.
Kuo estimated that once iPhone X's production issues are solved in the fourth quarter of this year, shipments will "pick up strongly" in the first half of 2018.

Related Roundup: iPhone X

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TrueDepth Camera System is Primary Reason for Slow iPhone X Production

Following a report claiming Apple's suppliers are shipping only about 40 percent of the components originally planned for initial production of the iPhone X, a new report suggests the TrueDepth camera is the primary bottleneck.


The word comes from KGI Securities analyst Ming-Chi Kuo, who said the facial recognition system is "far more complex" than those on competing devices, which is making it challenging for Apple to achieve mass production.

An excerpt from Kuo's research note obtained by MacRumors:
TrueDepth camera may be main production bottleneck of iPhone X ramp. The 3D sensing (TrueDepth camera) on iPhone X is composed of a structured-light system, time-of-flight system and a front-facing camera, which represents a far more complex structure than those of rivals. It will therefore be harder to achieve mass production. While we project iPhone X will see output ramp up meaningfully in mid/ late October, tight supply may only start to ease in 1H18F due to strong demand.
Kuo said shipments of iPhone X components will likely ramp up in mid to late October. Given pre-orders begin October 27, with in-store availability starting November 3, all signs point towards the iPhone X being in extremely short supply.

Kuo believes iPhone X pre-orders have the potential to exceed 40-50 million units, so it's clear the device won't achieve supply-chain balance for quite awhile.

Related Roundup: iPhone X
Tags: KGI Securities, Ming-Chi Kuo, TrueDepth

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Ming-Chi Kuo Says iPhone X Unlikely to Reach Supply-Demand Balance Until Next Year

While the iPhone X launches November 3, with pre-orders beginning October 27, reliable analyst Ming-Chi Kuo believes Apple's high-end smartphone won't achieve complete supply-demand equilibrium until next year.


In his latest research note with KGI Securities, obtained by MacRumors, Kuo said customer demand for the iPhone X won't be fully met until at least the first half of 2018 due to supply constraints.
We believe the fullscreen design and facial recognition features will drive replacement demand for the iPhone X. However, due to supply constraints, we expect market demand won't be fully met before 1H18. We revise down our forecast for 2017F iPhone X shipments from 45-50 million to around 40 million units, but we therefore revise up our 2018 iPhone X shipment estimate to 80-90 million units.
In fewer words, getting an iPhone X in your hands may prove especially challenging this holiday shopping season.

In addition to supply constraints, Kuo said the reason why iPhone X pre-orders won't begin for another six weeks is likely because Apple doesn't want to cannibalize sales of the iPhone 8 and iPhone 8 Plus.

iPhone 8 and iPhone 8 Plus pre-orders began at 12:01 a.m. Pacific Time today. The devices launch Friday, September 22.

Earlier this week, Kuo said Apple's iPhone X production was less than 10,000 units per day, but the yield may be increasing as Apple ramps up mass production. He anticipated the iPhone X will remain in "severe short supply for a while."

Kuo also anticipated that a gold iPhone X would encounter some production problems and initially be available only in "extremely low volume," or launch at a later date, but Apple said the iPhone X comes only in Silver and Space Gray.

In today's research note, he said the lack of a gold color echoes his production concerns, but he didn't elaborate if he still thinks the iPhone X will eventually be released in gold like the iPhone 8 and iPhone 8 Plus.

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Tags: KGI Securities, Ming-Chi Kuo

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Ming-Chi Kuo: iPhone X Production Currently Just <10K Units Per Day, Blush Gold Color May Launch Later

KGI Securities analyst Ming-Chi Kuo issued a research note to investors today in which he said Apple's current iPhone X production totals less than just 10,000 units per day. For this reason, Kuo anticipates the iPhone X will remain in "severe short supply for a while" following its expected launch later this month.


Kuo also anticipates that the so-called "Blush Gold" colored iPhone X will encounter some production problems and will initially be available only in "extremely low volume." He said there is even a chance that the gold version will go on sale at a later date than the other colorways, which are rumored to be silver and black.

Here's the excerpt from Kuo's research note obtained by MacRumors:
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. 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.
Apple is expected to unveil the iPhone X, a new Apple TV with 4K video, and Apple Watch Series 3 models with LTE at its first-ever event at Steve Jobs Theater tomorrow. Join us at 10:00 a.m. Pacific Time for complete coverage.

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Tags: KGI Securities, Ming-Chi Kuo

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KGI: All iPhone X Colors Will Have Black Bezels to Ensure ‘Better Aesthetic Design’

KGI Securities analyst Ming-Chi Kuo has a new prediction about how Apple will design the front of the "iPhone X." Kuo believes that no matter the color of the device's casing, the front bezels will be black. This will ensure "better aesthetic design," hiding the front-facing camera sensors on the iPhone X's notch, which would otherwise stand out as little black dots on a white bezel.


This means that instead of white bezels on a silver or gold iPhone X (as seen above), Kuo argues that black bezels on every version of the new smartphone will better blend into the 5.8-inch OLED display and sensor notch. The iPhone X is expected to come in a limited number of colors, including silver, "blush gold", and black.

The same report highlights the "biggest selling point" of the new OLED iPhone X -- 3D sensing -- including a break down of all the components that will be working together on the front-facing sensor bar. From left to right there's the structured light receiver, proximity sensor, ambient light sensor, front camera, and structured light transmitter. Kuo noted that the ambient light sensor is not directly required for 3D sensing, although it can help to improve 3D sensing performance in some capacity.

The report further breaks down these sensors, and offers an analysis of the source of each module. The structured light transmitter module was made by LG Innotek, includes a vertical-cavity surface-emitting laser designed by Lumentum, and has half a dozen other individual components: epitaxial wafers, diffractive optical element, wafer level optical, filter, and active alignment equipment.

The report closes with predictions for some of the most popular and "important" applications for 3D sensing: using facial recognition software to replace fingerprint recognition, and a "better selfie user experience." The official reveal of the iPhone X is just three days away, with Apple's event in Cupertino set to kick off at 10:00 a.m. local time on September 12.

Related Roundup: iPhone X
Tags: KGI Securities, Ming-Chi Kuo

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Apple Watch Series 3 Unlikely to Support Direct Phone Calls, but VoIP Calling a Possibility

The third-generation Apple Watch, set to launch this fall with LTE support for the first time, is unlikely to support phone calls, KGI Securities analyst Ming-Chi Kuo told investors in a note shared this morning.

According to Kuo, while a voice service that replaces the iPhone's calling functionality is "feasible," he believes Apple must first work on improving the "user experience of data transmission." As a result, he says the Apple Watch "probably" won't support traditional phone calls "this year."


The watch could, however, support VoIP services like FaceTime and Skype, as FaceTime audio calling is already supported on current Apple Watch models.
This has two benefits: (1) negotiations with mobile operators will be more simple and the chances of cooperation with mobile operators will improve; and (2) 3G connectivity can be scrapped, simplifying the antenna design and facilitating internal design. However, we think there is a chance that users may use LTE Apple Watch to access VoIP services, such as FaceTime and Skype.
Kuo also says that based on a lack of internal space, the LTE Apple Watch is likely to use an eSIM instead of a physical SIM slot, with the device set up to share the same phone number with an iPhone. He warns that LTE connectivity in the Apple Watch could be limited to specific countries and markets as not all mobile operators support that particular business model.

Rumors have already suggested that the major carriers in the United States, including Verizon, AT&T, and T-Mobile, will support and sell the upcoming LTE Apple Watch.

Though Apple is currently embroiled in an ongoing patent dispute with Qualcomm, Kuo believes Apple will use Qualcomm chips in the Apple Watch because Qualcomm's technology is superior to Intel's with smaller chips that consume less power.

Finally, Kuo predicts Apple has no intention of developing an Android app for the Apple Watch at this time, given that it would be difficult to have the same deep integration between Apple Watch and an Android phone that's possible with the Apple Watch and iPhone.

The third-generation Apple Watch is expected to be introduced in September alongside new iPhones. LTE connectivity is expected to be the main selling point for the device, and while there were some rumors pointing towards major design changes, Kuo has previously said there will be no "obvious change" to the form factor.


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Apple Pressing LG to Add OLED Display Production for 2018 iPhone, Limiting Samsung’s Leverage

Amid reports Apple is investing billions of dollars to help LG begin production of OLED displays for future iPhones, KGI Securities analyst Ming-Chi Kuo has issued a new report sharing his take on the situation.


According to Kuo, the OLED display panel for this year's "iPhone 8" has been the "single most troublesome component for Apple in terms of bargaining power," as Samsung is currently the only company with design and production capabilities to make the displays. To counter Samsung's advantage, Apple is working hard to support LG's efforts to ramp up similar expertise and capabilities.
We think Apple is therefore committed to having LGD geared up for its OLED iPhone display business in 2018 as it seeks to reduce supply risks. Even though LGD may likely start off with minimal initial penetration in 2018 (we estimate no more than 4-6%), the effort, with the full commitment of both Apple and LGD, will help LGD mature during the process and steadily gain supply share from 2019 onward. This will in turn continuously boost Apple’s bargaining power on OLED prices.
Kuo predicts LG will capture 10–20 percent of iPhone OLED display production in 2019 and up to 20–30 percent in 2020, helping to diversify Apple's sourcing and limit Samsung's leverage.

While LG will have expertise at production of the display panels themselves, Kuo predicts Foxconn subsidiary General Interface Solution (GIS) will be brought on board to assist with lamination processes. GIS would also offer expertise in production troubleshooting and vertical integration with Foxconn, so it would be an ideal partner for accelerating LG's growth in Apple's display supply chain.


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Ming-Chi Kuo Says Apple Likely to Unveil 10.5″ iPad Pro and Touchscreen Siri Smart Speaker at WWDC

Prominent KGI Securities analyst Ming-Chi Kuo has released a "2017 WWDC highlights" report, outlining his expectations for next month's keynote event. While he expects the typical previews of the next versions of iOS, macOS, watchOS, and tvOS, he also predicts we will see several hardware-related announcements.


One major debut Kuo expects to see is the long-rumored 10.5-inch iPad Pro, which he says has a greater than 70 percent chance of debuting at the event based on the timing of production ramp-up, which he sees as happening at the end of the current quarter. In line with previous rumors, Kuo believes the 10.5-inch iPad Pro will have a similar form factor as the current 9.7-inch model, squeezing in a larger display thanks to narrower bezels.
The newly designed 10.5” iPad Pro will have a similar form factor to the 9.7” model, but will feature a larger display thanks to narrow bezels. The new design should improve the user experience and help gain traction in the corporate/ commercial sectors. We forecast 10.5” iPad shipments of 5.0-6.0mn units in 2017F, accounting for 15% of total 2017F
iPad shipments.
Kuo also reiterates his belief that there is a greater than 50 percent chance Apple will unveil its Siri smart speaker at WWDC. He previously said that the speaker may not actually launch until later in the year, but an announcement at WWDC would give developers time to begin building support for the product.
In our April 28 Insight report (“Apple’s first home AI product to see cyclical shipments of over 10mn units; main competitor is Amazon Echo”), we offered estimates for the new home AI/ Siri speaker line. We also believe this new product will come with a touch panel.
For the first time, Kuo says Apple's speaker will include a touch panel display, a detail that has remained unclear since rumors began. Most previous rumors have made no mention of whether the product will include a display, but Phil Schiller recently suggested such smart speaker products would benefit from the inclusion of a screen.

Apple's WWDC keynote kicks off at 10:00 am Pacific Time on Monday, June 5, and MacRumors will have full coverage of the event as it unfolds.


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Ming-Chi Kuo Says Apple Likely to Unveil 10.5″ iPad Pro and Touchscreen Siri Smart Speaker at WWDC

Prominent KGI Securities analyst Ming-Chi Kuo has released a "2017 WWDC highlights" report, outlining his expectations for next month's keynote event. While he expects the typical previews of the next versions of iOS, macOS, watchOS, and tvOS, he also predicts we will see several hardware-related announcements.


One major debut Kuo expects to see is the long-rumored 10.5-inch iPad Pro, which he says has a greater than 70 percent chance of debuting at the event based on the timing of production ramp-up, which he sees as happening at the end of the current quarter. In line with previous rumors, Kuo believes the 10.5-inch iPad Pro will have a similar form factor as the current 9.7-inch model, squeezing in a larger display thanks to narrower bezels.
The newly designed 10.5” iPad Pro will have a similar form factor to the 9.7” model, but will feature a larger display thanks to narrow bezels. The new design should improve the user experience and help gain traction in the corporate/ commercial sectors. We forecast 10.5” iPad shipments of 5.0-6.0mn units in 2017F, accounting for 15% of total 2017F
iPad shipments.
Kuo also reiterates his belief that there is a greater than 50 percent chance Apple will unveil its Siri smart speaker at WWDC. He previously said that the speaker may not actually launch until later in the year, but an announcement at WWDC would give developers time to begin building support for the product.
In our April 28 Insight report (“Apple’s first home AI product to see cyclical shipments of over 10mn units; main competitor is Amazon Echo”), we offered estimates for the new home AI/ Siri speaker line. We also believe this new product will come with a touch panel.
For the first time, Kuo says Apple's speaker will include a touch panel display, a detail that has remained unclear since rumors began. Most previous rumors have made no mention of whether the product will include a display, but Phil Schiller recently suggested such smart speaker products would benefit from the inclusion of a screen.

Apple's WWDC keynote kicks off at 10:00 am Pacific Time on Monday, June 5, and MacRumors will have full coverage of the event as it unfolds.


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Apple’s Siri-Based Smart Speaker Has ‘Over 50% Chance’ of Debuting at WWDC in June

Apple's widely rumored Siri-based smart speaker and home hub has an "over 50 percent chance" of being announced at WWDC, scheduled for June 5-9, according to often-reliable Apple analyst Ming-Chi Kuo of KGI Securities.

The device is rumored to have a "Mac Pro-like" concave design (Image: iFunnyVlogger)

Kuo said Apple's smart home product will likely launch in the second half of 2017 and cost more than the Amazon Echo, $179. The device will supposedly support AirPlay with "excellent acoustics performance" from one woofer and seven tweeters. Kuo said its performance will be similar to the iPhone 6/6s.

An excerpt from Kuo's research note obtained by MacRumors:
We believe there is an over 50% chance that Apple will announce its first home AI product at WWDC in June and start selling in the ]second half of 2017] in order to compete with the new Amazon Echo models to be launched […]

We expect Apple’s first home AI product will have excellent acoustics performance (one woofer + seven tweeters) and computing power (similar to iPhone 6/6S AP). Therefore the product is likely to be positioned for: (i) the high-end market; (ii) better entertainment experience; and (iii) higher price than Amazon Echo.
Last week, leaker Sonny Dickson likewise said Apple's smart speaker could be announced as early as WWDC. He said the device will run a variation of iOS with unspecified Beats technology, in addition to a Mac Pro-like concave top with built-in controls and speaker meshing covering the majority of its surface.

Apple's plans for a smart home device and Amazon Echo competitor were first revealed by The Information in May 2016, and Bloomberg reported that the device had entered prototype testing in September.

The latter report said Apple's smart home device would be able to control appliances, locks, lights, and curtains through Siri voice commands. It added that some of the prototypes in testing have facial recognition sensors, in line with a CNET report claiming the device could have a built-in camera.

Kuo said Taiwan-based Inventec will be the exclusive speaker supplier, including both the woofer and tweeters.


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