KGI: Apple Developing High-End Over-Ear Headphones, Launching Late 2018 at the Earliest

KGI Securities analyst Ming-Chi Kuo has issued a new research note outlining his expectations for Apple's "acoustic accessories" pipeline, claiming the company is working on both updated AirPods and "own-brand, high-end over-ear headphones" with an "all-new design." The new over-ear headphones are said to debut in the fourth quarter of this year at the earliest.
Apple to have own-brand, high-end over-ear headphones with all-new design; to be as convenient as AirPods with better sound quality; shipments to begin 4Q18F at earliest; Primax & SZS will be the key suppliers & will benefit from high ASPs. We believe that after AirPods and HomePod, Apple’s next addition will be high-end over-ear headphones, making its acoustic accessory lineup more complete. Existing suppliers Primax and SZS will be Apple’s partners on this new product. Primax will receive assembly orders on its familiarity with the acoustic business, and SZS is likely to use MIM technology advantages as leverage to become the exclusive or main MIM part supplier. The new headphones will be priced higher than AirPods and should help boost the business momentum of Primax as the assembly provider.


Beats Studio3 Wireless and current AirPods

Kuo's prediction on upgraded AirPods follows a similar report just a few days ago from Bloomberg. Kuo says the new AirPods should launch in the second half of this year.
We think the main difference of the upgraded AirPods, which won’t look much different from current AirPods, will be the wireless charging case and the adoption of an upgraded W1 chip. We believe that the charging case will adopt different processes for the external appearance and to meet thermal requirements from wireless charging, the hinge price will rise 60-80%.
Beyond this year's update for the AirPods, Bloomberg claimed this week that Apple is working on a subsequent AirPods update that would bring water resistance to the earphones, but that model wouldn't arrive until 2019 at the earliest.


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KGI: Apple Could Ship 100 Million Units of New 6.1-inch LCD iPhone, Replacing iPhone 8 and 8 Plus in 2018 Device Line-up

KGI Securities analyst Ming-Chi Kuo today shared shipment projections with MacRumors for Apple's rumored 6.1-inch iPhone that he expects to launch in the second half of 2018.

The device is said to have some iPhone X features such as Face ID, but design compromises will enable Apple to put it at a more affordable price point. They could include an LCD screen instead of an OLED display, an aluminum frame, a single lens camera, and no 3D Touch.

We project shipments under the new product life cycle (4Q18-3Q19) for the 6.1" LCD iPhone, estimated to be launched in 2H18, will reach around 100mn units.
According to Kuo's research note, shipment projections could fluctuate depending on the selling price of the 6.1-inch LCD iPhone, which Kuo believes will be somewhere between $700 and $800 in the United States. In his analysis, shipments will be around 105-115 million units when priced at US$699, and 95-105 million units when priced at US$799.

The price could also depend on "whether Apple ultimately sees the new 6.1-inch LCD model as the successor of iPhone 8 or 8 Plus," according to Kuo. In a previous note, KGI Securities has said the 6.1-inch iPhone will have a standard non-stacked logic board and rectangular battery pack like the iPhone 8 and iPhone 8 Plus.

Kuo expects the 6.1-inch LCD iPhone to account for around 50 percent of the new iPhone line-up's shipments, with sales remaining strong into 2019. On that basis, today's shipping estimate suggests lifetime sales of 2018 iPhones could reach approximately 200 million units.

The device is expected to be announced around September-October as usual alongside a new 5.8-inch iPhone X and a larger 6.5-inch version dubbed iPhone X Plus.

Related Roundup: 2018 iPhones

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KGI Expects Intel to Be Exclusive Supplier of Modems in 2018 iPhones

Intel could be the exclusive supplier of LTE modems for all new iPhones launched in 2018, according to KGI Securities analyst Ming-Chi Kuo.


The key takeaway of the research note, obtained by MacRumors:
We expect Intel to be the exclusive supplier of baseband chip for 2H18 new iPhone models, while Qualcomm may not have a share of the orders at all.
Kuo previously expected Intel to supply 70 percent of the modems, with Qualcomm providing the remaining 30 percent of orders, but he now believes Intel will be the sole supplier given several competitive advantages.

First and foremost, Intel's latest XMM 7560 modem [PDF] supports both GSM and CDMA, meaning that Apple could release a single iPhone model that works across AT&T, Verizon, T-Mobile, and Sprint. Intel modems previously lacked CDMA, meaning Apple could never fully ditch Qualcomm for all iPhone models.

Apple is also embroiled in a major lawsuit with Qualcomm over anticompetitive licensing practices, and Kuo believes the iPhone maker switching to Intel as its exclusive modem supplier will place added pressure on Qualcomm.

Kuo added that it's too early to tell if Intel will be able to maintain its position of exclusivity in the future, as Apple typically prefers to diversify its supply chain. He adds that Apple may give orders to Qualcomm again in exchange for concessions in the ongoing lawsuit between the two companies.

In order to make up for the lost iPhone business, Kuo expects Qualcomm will be more aggressive in securing orders from Chinese smartphone makers. However, he believes these Chinese companies don't want a monopolized market, so Qualcomm's ability to gain market share in the country may be limited.

Kuo also reiterated that LTE transmission speeds will increase significantly in new iPhone models released in the second half of 2018.

In a previous research note from November, Kuo highlighted that Intel's XMM 7560 modem supports 4x4 MIMO technology, compared to only 2x2 MIMO in the iPhone 8, iPhone 8 Plus, and iPhone X. The faster LTE speeds will also be made possible by an upgraded antenna design in the next iPhones.

Related Roundup: 2018 iPhones

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Ming-Chi Kuo Casts Doubt on iPhone SE 2, Expects Few Changes Should New Model Launch

KGI Securities analyst Ming-Chi Kuo, who has sources within Apple's supply chain in Asia, has issued a research note today that casts doubt on rumors about a second-generation iPhone SE launching in the second quarter of 2018.


Kuo believes Apple doesn't have enough spare development resources to focus on launching another iPhone, with three new models already in the pipeline, including a second-generation iPhone X with a "much different" internal design, a larger 6.5-inch version dubbed iPhone X Plus, and a lower-priced 6.1-inch iPhone with Face ID but design compromises like an LCD screen.

An excerpt from the research note, obtained by MacRumors, edited slightly for clarity:
The announcement of three new iPhone models in the same quarter in the second half of 2017 was the first time Apple made such a major endeavor, and we believe the delay of iPhone X, which had the most complicated design yet, shows that Apple doesn't have enough resources available for development. […]

With three new models in the pipeline for the second half of 2018, we believe Apple may have used up its development resources. Also, we think the firm will do all it can to avoid repeating the mistake of a shipment delay for the three new models. As such, we believe Apple is unlikely to have enough spare resources to develop a new iPhone model for launch in 2Q18.
If there really is a so-called iPhone SE 2 on Apple's roadmap, Kuo expects it will have few outward-facing changes. He predicts the device would likely have a faster processor and a lower price, rather than iPhone X-like features like a nearly full screen design, 3D sensing for Face ID, or wireless charging.

There have been many rumors about Apple launching a new iPhone SE in 2018, with most of the sources based in Asia, including research firm TrendForce and publications like the Economic Daily News. The latest rumor suggested a new iPhone SE with wireless charging could launch in May-June.

The current iPhone SE looks much like the iPhone 5s, including its smaller four-inch display preferred by a subset of customers. The device is powered by Apple's A9 chip, like the iPhone 6s and iPhone 6s Plus, and it has 2GB of RAM, a 12-megapixel rear camera, a 3.5mm headphone jack, and Touch ID.

Apple hasn't fully refreshed the iPhone SE since it launched in March 2016, but it did double its available storage capacities to 64GB and 128GB last March. It also dropped the device's starting price to $349 last September.

Related Roundup: iPhone SE
Buyer's Guide: iPhone SE (Don't Buy)

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KGI Shares Latest on 6.1-Inch iPhone, Next iPhone X and iPhone X Plus to Have 4GB of RAM and Two-Cell Batteries

KGI Securities analyst Ming-Chi Kuo, who often relays information gathered from sources within Apple's supply chain in Asia, today shared a trio of new research notes that outline both new and existing predictions about the new iPhone X, iPhone X Plus, and lower-priced 6.1-inch iPhone expected later this year.

iPhone X Plus dummy model versus current iPhone X via Ben Geskin

MacRumors obtained a copy of each research note, and we've rounded up the key points. More details are available in our 2018 iPhones roundup.

All-New 6.1-inch iPhone with LCD


New:
• Taiwanese manufacturers Pegatron, Foxconn, and Wistron will be the key assemblers of the 6.1-inch iPhone, with 60 percent, 30 percent, and 10 percent allocation of EMS respectively
• Japan Display will supply around 70 percent of LCD panels for the 6.1-inch iPhone. Rumors suggest Apple will use Japan Display's six-inch Full Active LCDs that only require ultra-slim 0.5mm bezels on all four sides

Reiterated:
• Nearly full screen design with no home button and notch for TrueDepth sensors
• 3D sensing for Face ID and Animoji
• Rectangular-shaped, one-cell battery with 2,850-2,950 mAh, up to 8.5 percent larger than current iPhone X. The increased capacity will be the result of a smaller logic board given manufacturing advancements
• Lower price point: starting at between $700 and $800 in the United States

The rumored 6.1-inch iPhone is shaping up to be a lower-priced iPhone X with some design compromises, which Kuo previously said will include an aluminum frame, a lack of 3D Touch, a single rather than dual lens rear camera, and 3GB of RAM, which will be less memory than other new 2018 iPhones have.

Next-Generation iPhone X and iPhone X Plus


According to Kuo, the second-generation iPhone X and a larger 6.5-inch version we're calling iPhone X Plus will each have an increased 4GB of RAM. Unsurprisingly, given its larger physical size, the iPhone X Plus is also expected to have up to a 25 percent larger battery capacity of 3,300-3,400 mAh vs. iPhone X.

Kuo adds that Apple has settled on a two-cell, L-shaped design for the second-generation iPhone X and iPhone X Plus battery, compared to a single-cell, L-shaped design that could have yielded up to 10 percent additional capacity.

By the sounds of it, the new iPhone X and iPhone X Plus, beyond the latter's larger screen size, won't be significant upgrades. Kuo doesn't expect improvements to be made to the TrueDepth camera system until 2019. Nevertheless, he expects the devices to sell well, especially the lower-priced 6.1-inch iPhone.

Related Roundup: 2018 iPhones

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KGI: 6.1-Inch iPhone to Have Single-Lens Rear Camera, Aluminum Frame, 3GB RAM, and No 3D Touch, Cost $700-$800

KGI Securities analyst Ming-Chi Kuo today shared additional details about the rumored 6.1-inch iPhone that he expects to launch in the second half of 2018.

Note: KGI's image has a slight error. iPhone 8 Plus has 3GB of RAM.

We already know the device is said to have some iPhone X features, including Face ID, but with some design compromises to achieve a cheaper price point. That will include an LCD screen, as known, and now Kuo says the device will have an aluminum frame, single-lens rear camera, and no 3D Touch.

It's unclear if the back of the iPhone will also be forged from aluminum rather than glass, a tradeoff that would inhibit wireless charging.

In a research note obtained by MacRumors on Tuesday, Kuo added that the 6.1-inch iPhone also won't adopt the iPhone X's stacked logic board and L-shaped battery pack. Instead, he said the device will have a standard non-stacked logic board and rectangular battery pack like the iPhone 8 and iPhone 8 Plus.

Kuo believes the 6.1-inch iPhone will be a mid-range device priced between $700 and $800 in the United States, up from his previous $650 to $750 estimate. The device is expected to be announced around September-October as usual alongside a new 5.8-inch iPhone X and a larger 6.5-inch version dubbed iPhone X Plus.

The research note reads in part:
Development schedule of new 6.1" LCD iPhone slightly behind 6.5" and 5.8" OLED models, but it may enjoy extended longevity into 1H19F, boosting slow season outlook: We predict the 6.1" LCD iPhone will differ from the 6.5" and 5.8" OLED models in terms of certain specs, for reasons of cost/price and product segmentation. However, this shouldn’t have any effect on key user experience. We revise up our price projection for the 6.1" model from $650-$750 to $700-$800, and remain positive on shipments momentum.
KGI Securities expects the 6.1-inch iPhone to account for around 50 percent of the new iPhone lineup's shipments, with sales remaining strong into 2019.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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KGI: Apple to Discontinue iPhone X Rather Than Sell at Lower Price When Second-Generation Model Launches

Apple will discontinue the first-generation iPhone X when the second-generation model launches later this year, rather than bump the device down its smartphone lineup for lower than $999, according to KGI Securities analyst Ming-Chi Kuo, who clarified his earlier prediction with a follow-up research note today.


Kuo said that Apple keeping the current iPhone X in its smartphone lineup for a reduced price, such as $899, would likely cannibalize sales of the mid-range 6.1-inch iPhone with Face ID and a LCD display that he expects to launch in the second half of 2018 for between $650 and $750 in the United States.

An excerpt from Kuo's research note obtained by MacRumors on Monday:
iPhone X would hurt product brand value & lineup of 2H18 new models if it continues to sell at a lower price after 2H18 new models launch: Lowering iPhone X's price after the 2H18 new models launch would be a negative to product brand value given 3D sensing and OLED display are features of the new high-price model. Additionally, to sell iPhone X at a lower price may have a negative impact on shipments of the new 6.1" LCD iPhone in 2H18. Thus, we estimate iPhone X will reach end-of-life (EOL) around the middle of 2018.
If accurate, Apple's smartphone lineup later in 2018 would consist of the second-generation 5.8-inch iPhone X, which will likely remain $999, a larger 6.5-inch version dubbed iPhone X Plus, and the mid-range 6.1-inch iPhone. Below that would likely be iPhone 8, iPhone 7, and iPhone SE models.

Here's how Apple's new iPhone lineup could look:

• iPhone SE: $349
• iPhone 7 and iPhone 7 Plus: $449 and $569
• iPhone 8 and iPhone 8 Plus: $549 and $669
• 6.1-inch iPhone with Face ID: $649 or $749
• 5.8-inch second-generation iPhone X: $999
• 6.5-inch second-generation iPhone X Plus: $1,099

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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KGI: Larger-Sized iPhones Coming This Year Will Offset Weakening Demand for iPhone X in China

Weaker-than-expected demand for iPhone X in China has led market analysts to revise down shipments for the first half of 2018, but larger-sized iPhone models in the pipeline should see Apple grow its overall worldwide shipments year-on-year, according to KGI Securities analyst Ming-Chi Kuo, who shared the information in a new research report obtained by MacRumors.


We revise down 1Q18 and 2Q18 shipments of iPhone X to 18mn units and 13mn units, respectively, lower than market consensus of 20-30mn and 15-20mn units. We expect iPhone X will go to end of life (EOL) around mid-2018 and that total life cycle shipments will be around 62mn units, lower than our previous forecast of 80mn units.
Two main reasons are given for the weaker-than-expected demand for iPhone X in China. First, in Q4 2017, consumers were willing to wait on average 10 months longer before replacing their existing phones, compared to shorter replacement cycles in the year-ago quarter. In Q4 2016, smartphone users upgraded after between 14 and 16 months of ownership, compared to between 24 and 26 months in Q4 2017. The numbers are said to be reflected in lower shipment forecasts by Chinese phone makers for the second half of last year.

The second big factor is said to be Chinese consumers' penchant for larger displays. According to Kuo, the notched design on the iPhone X isn't yet compatible with many popular Chinese apps, leading many customers to see it as offering less usable screen space than 5.5-inch iPhone Plus models. This confusion, coupled with the high price of iPhone X, is thought to have undercut replacement demand.

Despite the downward revisions in shipments for the first half of this year – and Kuo's moot point that Apple might end iPhone X sales in the summer – Kuo believes overall iPhone shipments will maintain year-on-year growth of 0-5 percent over the first half of 2018, mainly thanks to Apple's corrected supply chain share. However, Kuo thinks Apple's next product line-up will significantly improve competitiveness in the second half of the year, when Apple's "real super cycle" will kick in.

Kuo has previously predicted Apple will introduce three iPhones in 2018: an OLED model that measures in at 5.8 inches like the current iPhone X, an OLED model that measures in at 6.5 inches that will serve as a sort of "iPhone X Plus," and a 6.1-inch model that features an LCD display. Kuo believes all three models will be equipped with a full-screen notched design and TrueDepth camera system like the iPhone X.
We believe the addition of 6.5-inch OLED and 6.1-inch LCD iPhone models will boost Apple's market share in China, and that the US$650-750 6.1-inch LCD iPhone will make it easier for users worldwide to own a 3D sensing and full-screen design iPhone which offers an innovative user experience.
For these reasons, Kuo believes iPhone shipments will grow 5-10 percent year on year over 2018. Kuo's estimate is better than the market consensus of overall smartphone shipment growth worldwide, which is expected to experience between a 5 percent decline and 5 percent growth. As a result, KGI retains a positive outlook for the iPhone supply chain in the second half of 2018.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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Apple’s Upgraded TrueDepth Camera System in Future iPhones Will Necessitate Larger Batteries

iPhone models released in 2019 and later will likely feature an upgraded TrueDepth camera system that will consume more power, resulting in a need for larger-capacity batteries, according to KGI Securities analyst Ming-Chi Kuo.


In a research note obtained by MacRumors, Kuo said Apple has technologies at its disposal to develop larger-capacity batteries.
Apple capable of designing new system for large-capacity batteries: We believe the adoption of TrueDepth camera for 3D sensing in 2017-18 will create demand for larger-capacity batteries. From 2019, we predict iPhone may adopt upgraded 3D-sensing and AR-related functions, and it will consume more power, further increasing demand for large-capacity batteries. We believe Apple's key technologies, including semiconductor manufacturing processes, system-in-package (SIP), and substrate-like PCB (SLP), will create the required space for larger batteries.
Kuo unsurprisingly expects Apple will use these technologies to continue increasing iPhone battery capacities in 2019 and 2020, as it routinely does, which should result in even longer battery life for future models.

Kuo reiterated that TrueDepth will be expanded to a trio of iPhone models next year, including a new 5.8-inch iPhone X, a larger 6.5-inch model we're calling iPhone X Plus, and a new 6.1-inch mid-range model with an LCD display, but it sounds like the camera system will remain unchanged in 2018.

As far as next year is concerned, Kuo previously said the second-generation iPhone X could have a one-cell L-shaped battery that would provide up to 10 percent additional capacity compared to the two-cell battery in the current iPhone X, which of course could result in slightly longer battery life.

He added that next year's so-called "iPhone X Plus" is likely to retain a two-cell battery design, but the larger size of the 6.5-inch device will still allow it to have a higher capacity in the range of 3,300 to 3,400 mAh.

Apple is expected to release the new iPhone X and iPhone X Plus in its usual timeframe of September to October next year.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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Ming-Chi Kuo Expects Upgraded AirPods to Launch in Mid to Late 2018

Apple will release an upgraded version of AirPods in the second half of 2018, according to KGI Securities analyst Ming-Chi Kuo.


An excerpt from Kuo's latest research note, a copy of which was obtained by MacRumors:
Media reports over the past few days on brisk AirPods demand and Apple struggling to keep up with holiday season demand align with our findings and positive predictions on AirPods in several previous reports. […]

In 2018, we predict AirPods shipments will grow 100% YoY to 26-28mn units. We forecast the ASP of RFPCB for upgraded AirPods in 2H18 may increase, further benefiting business momentum of Unitech and Compeq.
Kuo said one internal change on the second-generation AirPods will include a "smaller quartz component," but he didn't provide any further details about new outward-facing features or improvements to expect.

Kuo said the new AirPods will continue to be assembled by Taiwanese manufacturer Inventec, with individual components supplied by fellow Taiwanese companies such as Unitech, Compeq, TXC, and HLJ.

Apple will also be releasing a new inductive AirPods charging case that will enable the wireless earphones to be charged with its new AirPower charging mat, which it said launches at some point in 2018.

Apple teased the AirPower mat at its iPhone X event back in September. It will be able to charge the Apple Watch Series 3, an iPhone X or iPhone 8 model, and AirPods inside the new charging case simultaneously.


As for the current AirPods, Kuo said Apple's suppliers are unable to make them quick enough to fully satisfy what he believes is robust holiday season demand, which likely explains why AirPods are sold out until January.

Kuo, who keeps a close eye on Apple's supply chain in Asia, said Apple has recruited Luxshare to help make AirPods, but RF printed-circuit boards for AirPods batteries are proving to be a key production bottleneck.

Kuo also reiterated his estimate that AirPods shipments will double in 2018 to 26-28 million units on a year-over-year basis, suggesting Apple will have sold around 13-14 million AirPods worldwide by the end of this year.


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