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.

Related Roundup: iPhone X
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.

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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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All 2017 iPhones to Come in Only Three Colors, Launch Simultaneously in September

Apple's upcoming 2017 iPhones, including the "iPhone 8," the iPhone 7s, and the iPhone 7s Plus, will be available in just three colors -- black, silver, and gold -- according to a new investor note shared today by respectable KGI Securities analyst Ming-Chi Kuo.

Kuo previously said the iPhone 8 would be available in a limited number of colors, but made no mention of its two companion devices. His three color list seemingly matches up with an iPhone 8 dummy model leak that we saw earlier this week, but one of the dummy model shades displayed was more of a copper than a gold, so it's not clear if it's an accurate depiction of the colors we can expect.

If Apple does plan on introducing the iPhone in just three hues this year, we won't be seeing rose gold or the multiple shades of black that were available in the iPhone 7.


According to Kuo, all three iPhone models expected in 2017 will also support fast charging, but he warns that consumers may need to purchase a Type-C power adapter to enable faster charging. The current iPad Pro has a similar feature -- it uses the MacBook's $49 29W USB-C power adapter for fast charging.

Kuo now believes Apple will begin production verification tests on the iPhone 8 in late August, leading to mass production in mid-September, which is earlier than Kuo's previous estimates that suggested mass production might not begin until the middle of October.

With mass production starting earlier, Kuo expects Apple will announce all three iPhone models simultaneously in September, with plans to launch them all on the same date. The OLED version will be in short supply, though, with Kuo forecasting shipments of 2-4 million units in the third quarter.
The OLED version will be in short supply as we forecast shipments in 3Q17 will be 2-4mn units or less. We do not think production of the OLED iPhone will pick up substantially before 4Q17; and given strong demand, tight supply may persist until 1Q18 before improving much.
Though a September launch is expected, supplies of the iPhone 8 may be constrained until the first quarter of 2018 due to an expected high demand. Still, Kuo's latest prediction is a rosier outlook than we've seen in the past, as some former rumors suggested Apple could potentially announce the iPhone 8 and then delay its launch until October or November.

Related Roundup: iPhone 8
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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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All 2017 iPhone Models Said to Include Standard 5W USB-A Adapter, With Wireless Charger Sold Separately

Well-regarded KGI Securities analyst Ming-Chi Kuo this morning released a note for investors in which he made 10 predictions related to the three iPhones slated for release in 2017, including the elimination of Touch ID in the "iPhone 8."

We've now gotten our hands on Kuo's full note, and it includes several additional details that were not covered in our original post.

iPhone 8 renders from iDrop News

First and foremost, on the topic of Touch ID, Kuo's note clearly says the iPhone 8 will not support fingerprint recognition, a prediction some MacRumors readers thought was ambiguous in the first post based on the included wording. Direct from the note:
As the OLED iPhone will not support fingerprint recognition, we think it may have to rely on facial recognition to ensure security. As such, we believe Apple (US) will be very demanding as regards the quality of 3D sensing, thereby increasing the difficulties in hardware production and software design.
Kuo's claim has since been backed up by Bloomberg in a report suggesting Touch ID will be replaced by advanced facial recognition technology in the iPhone 8, lending more credence to Kuo's prediction.

A second tidbit suggests the iPhone 8 and its companion devices, the "iPhone 7s" and the "iPhone 7s Plus" will all adopt glass bodies with metal frames to facilitate WPC-standard wireless charging functionality. WPC-standard refers to the Wireless Power Consortium, which supports the Qi wireless charging functionality built into many Android devices.

According to Kuo, wireless charging will be enabled through an optional accessory that will be purchased alongside the new iPhones -- it won't be a default feature available out of the box. Qi wireless charging is in line with rumors that have predicted the iPhone 8 will support inductive charging rather than a true wireless charging feature.

An example of a Qi wireless charging solution

Kuo also believes that while the iPhone 8 will include an embedded USB-C power delivery IC for higher charging efficiency, it will continue to ship with the same 5W power adapter equipped with a USB-A port that's included with iPhones today. A USB-A to Lightning cable will also be included as a standard accessory.

That deviates from a prediction made by Barclays analyst Blayne Curtis, who last week said the iPhone 8 would come bundled with a 10W power adapter with a USB-C connector.

Kuo's final prediction has to do with the RAM in the three new iPhone models. The first post said that the 4.7-inch iPhone 7s would include 2GB RAM while the 5.8-inch OLED iPhone 8 and 5.5-inch iPhone 7s would include 3GB RAM, but what was left out is that he also believes the DRAM transfer speed of the three new models will be faster than the iPhone 7 by 10 to 15 percent for better AR performance.

The rest of what Kuo had to say is available in the post we shared this morning, covering predictions like limited color options, 3D sensing for facial recognition, 64 and 256GB storage options, an improved speaker system, and possible supply shortages.

Related Roundup: iPhone 8
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Ming-Chi Kuo Predicts iPhone 8 Will Omit Touch ID Entirely, Come in Limited Color Options

KGI Securities analyst Ming-Chi Kuo today made ten predictions related to the 2017 debut of the "iPhone 8," "iPhone 7s," and "iPhone 7s Plus," which are expected to be announced in September and launch sometime afterwards (via StreetInsider).

Kuo's predictions today largely fall in line with all the rumors we've been hearing about the 2017 iPhones over the past few months, with a few new tidbits that suggest the iPhone 8 will be industry-leading in terms of its edge-to-edge design, come in limited color options, and that Apple may be removing Touch ID completely from the OLED smartphone.

A combination of leaked iPhone 8 parts via Benjamin Geskin

According to Kuo, the iPhone 8 will have "the highest screen-to-body ratio of any smartphone currently available worldwide," thanks to a drastic reduction in bezels and an edge-to-edge display that we've recently been seeing in various renders. A "notch" for the front-facing camera and sensors will be the only noticeable part of the iPhone 8's bezel design, Kuo said.

Kuo's new predictions also continue to corroborate the iPhone 8's lack of a physical Home button, but he goes on to state that Touch ID will not be incorporated into the OLED smartphone's display. The analyst didn't provide any mention of Touch ID moving elsewhere on the iPhone 8, like the back of the device or lock button as has been previously rumored and largely debunked.

Kuo instead referenced advanced features like "3D sensing for facial recognition," suggesting Apple is ready to ditch Touch ID completely for a new form of biometric security. The analyst said that Apple is still facing technical challenges with implementing Touch ID into a full-screen front-facing display.
"We predict the OLED model won’t support fingerprint recognition, reasons being: (1) the full-screen design doesn’t work with existing capacitive fingerprint recognition, and (2) the scan-through ability of the under-display fingerprint solution still has technical challenges, including: (i) requirement for a more complex panel pixel design; (ii) disappointing scan-through of OLED panel despite it being thinner than LCD panel; and (iii) weakened scan-through performance due to overlayered panel module. As the new OLED iPhone won’t support under-display fingerprint recognition, we now do not expect production ramp-up will be delayed again (we previously projected the ramp-up would be postponed to late October or later)."
Here's Kuo's full list of iPhone 8 predictions:
1: Apple will roll out three iPhone models in 2H17, including an all-new design 5.2” (or 5.8” depending on the definition of screen size in use) OLED iPhone & LCD models including 4.7” & 5.5” (front form factor design similar to current ones).

2: OLED iPhone will adopt full-screen design, with the highest screen-to-body ratio of any smartphone currently available worldwide (thanks to a notch display design); the OLED model will also come with a virtual Home button, though the button will not support fingerprint recognition.

3: OLED iPhone will support 3D sensing for facial recognition & improved selfie quality.

4: OLED iPhone & 5.5” LCD iPhone will both come with DRAM capacity of 3GB (for dual-camera requirements), while 4.7” version will only use 2GB DRAM (for only single camera).

5: Three new models will all come with 64GB and 256GB storage options.

6: All three new models will have a Lightning port; however, there will be an embedded USB-C power delivery IC for higher charging efficiency.

7: The output power of the receiver & speaker of OLED iPhone will be more consistent to create better stereo effects.

8: To maintain its boutique image, we think the OLED version will offer fewer options for casing colors than LCD iPhone models.

9: We predict October-November & August-September as production ramp-up schedules of OLED iPhone & LCD iPhone, respectively. "For optimized promotional effect, we think Apple may unveil the three models simultaneously in September, though the launch date of the OLED version may trail that of LCD models, and supply tightness may not improve before 1H18."

10: We forecast shipments of the three new models in 2017F will be 80-85mn units, with an equal split between OLED & LCD versions.
Another new tidbit includes Kuo's belief that the iPhone 8 will come in fewer color options than the iPhone 7s and iPhone 7s Plus, which the analyst said will help Apple maintain the OLED iPhone's "boutique image."

Otherwise, Kuo's predictions fall in line with previous reports we've seen on the 2017 iPhones, including 64GB and 256GB storage capacities, 3GB of RAM for iPhone 8 and iPhone 7s Plus and 2GB of RAM for iPhone 7s, and a Lightning port with the addition of USB-C Power Delivery for faster charging.

Kuo still believes that all iPhones will be revealed in September, but the iPhone 8 will see a wide availability well after the LCD models thanks to a later production ramp-up schedule. In May, Kuo predicted that a "worst case scenario" is also possible, where "severe supply shortages" will persist throughout 2017 for users looking to get their hands on iPhone 8, with supply tightness not improving until the first quarter of 2018.

Related Roundup: iPhone 8
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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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