Supply constraints will limit OLED to just 'iPhone 8,' benefitting Apple in long run - rep...
A new analyst report sheds some doubt on the "super cycle" concept because of a probable limit in OLED screen supply, suggesting that the pent-up demand for a revolutionary iPhone incorporating the flexible screens will only be sated after a few years -- which will boost AAPL over the long term.
In an analyst's note penned by Robert Cihra from Guggenheim Securities, and seen by AppleInsider, needed quantities of OLED screens for a full shift to the technology in the "iPhone 7s" and "iPhone 8" won't be met by suppliers only now ramping up for production. As a result, Apple will have to source nearly all of its short-term supply of the screens from Samsung.
Rather than a sea change in iPhone screen technology spanning an entire line in one update, Cihra believes that the technology will be limited to the high-end anniversary "iPhone 8," expected to surface in the fall. As a side-effect, explosive growth in iPhone sales in one year that may have been induced by a screen shift away from LED and towards OLED will be spread over up to 3 years and have a greater effect on stock price over time than it would have had otherwise.
Other than Samsung, there are several vendors of OLED panels. However, at this time, none come close to approaching the volume of the Samsung fabrication plants. Samsung holds the vast majority of OLED technology patents, and in April 2016 held 97.7 percent of the share of the OLED smartphone screen market.
This market dominance is unlikely to be impacted by Apple manufacturing partners any time soon. Apple's long-time iPhone screen supplier Japan Display received a $636 million bailoutand dedicated part of into buying a controlling stake in OLED firm Joled -- but when the investment will be productive for Japan Display is not clear.
Apple is also said to be involved in a multiple-year OLED screen delivery contract with Samsung, with a very recent deal for 60 million screens worth $4.3 billion underway, on top of a 100 million screen deal signed in 2016..
Should the OLED shift happen over multiple release years, Cihra expects that there will be a lower than expected 3% gain in iPhone sales from fiscal years 2016 to 2017, growing to an 11 percent gain from 2017 to 2018.
Cihra also sees a net gain in iPhone average selling price, as a result of the slower shift to OLED screens. The effect of more users migrating from older phones with the shift to larger screens in the iPhone 6 family is expected again, with the shift to OLED.
The premium "iPhone 8" could cost more than $1,000. Design features of the "iPhone 8" include a glass back and curved edge-to-edge 5.2-inch OLED display, concealing a Touch ID sensor, 3d facial recognition scanning technology, and FaceTime camera beneath the screen.
Apple is also expected to launch immediate successors to the iPhone 7 at the same time, sized with the same 4.7- and 5.5-inch screens. Reportedly, the "iPhone 7s" family retains LCD display technology.
As a result of all the factors leading up to a longer replacement cycle, Guggenheim's AAPL price target through calendar year 2018 has been raised to $180.
In an analyst's note penned by Robert Cihra from Guggenheim Securities, and seen by AppleInsider, needed quantities of OLED screens for a full shift to the technology in the "iPhone 7s" and "iPhone 8" won't be met by suppliers only now ramping up for production. As a result, Apple will have to source nearly all of its short-term supply of the screens from Samsung.
Rather than a sea change in iPhone screen technology spanning an entire line in one update, Cihra believes that the technology will be limited to the high-end anniversary "iPhone 8," expected to surface in the fall. As a side-effect, explosive growth in iPhone sales in one year that may have been induced by a screen shift away from LED and towards OLED will be spread over up to 3 years and have a greater effect on stock price over time than it would have had otherwise.
Other than Samsung, there are several vendors of OLED panels. However, at this time, none come close to approaching the volume of the Samsung fabrication plants. Samsung holds the vast majority of OLED technology patents, and in April 2016 held 97.7 percent of the share of the OLED smartphone screen market.
This market dominance is unlikely to be impacted by Apple manufacturing partners any time soon. Apple's long-time iPhone screen supplier Japan Display received a $636 million bailoutand dedicated part of into buying a controlling stake in OLED firm Joled -- but when the investment will be productive for Japan Display is not clear.
Apple is also said to be involved in a multiple-year OLED screen delivery contract with Samsung, with a very recent deal for 60 million screens worth $4.3 billion underway, on top of a 100 million screen deal signed in 2016..
Should the OLED shift happen over multiple release years, Cihra expects that there will be a lower than expected 3% gain in iPhone sales from fiscal years 2016 to 2017, growing to an 11 percent gain from 2017 to 2018.
Cihra also sees a net gain in iPhone average selling price, as a result of the slower shift to OLED screens. The effect of more users migrating from older phones with the shift to larger screens in the iPhone 6 family is expected again, with the shift to OLED.
The premium "iPhone 8" could cost more than $1,000. Design features of the "iPhone 8" include a glass back and curved edge-to-edge 5.2-inch OLED display, concealing a Touch ID sensor, 3d facial recognition scanning technology, and FaceTime camera beneath the screen.
Apple is also expected to launch immediate successors to the iPhone 7 at the same time, sized with the same 4.7- and 5.5-inch screens. Reportedly, the "iPhone 7s" family retains LCD display technology.
As a result of all the factors leading up to a longer replacement cycle, Guggenheim's AAPL price target through calendar year 2018 has been raised to $180.
Comments
I don't think some people understand how business works.
i also read another article that Samsung is hoarding OLEDs for their own phones, and for their sales to Apple. Everyone else just gets a trickle.
Other than the good PR that they received as the press still accuses Samsung and other OEMs of copying Apple to this day even for features that the other OEMs actually adopted first, there never was any ability for any war against Samsung or Android to succeed. The precedent set by the Supreme Court when they ruled for Microsoft over Apple more than 25 years ago made sure of that.
what started out as a relatively modest investment has turned out to be the most successful investment I've made. I've since added just a small number of other investments. I bought Amazon shortly after it came out, but sold at about $250. I had google for a while, but not for a couple of years. I bought Facebook when it came out, and bought more when it dropped to $20. I now also have Alibaba, which I'm very confident in for a long haul investment. And I'm looking at Snap. Snap is a risk, but there's far more upside than downside there, so it may be worthwhile.
i have a few other investments. I have only one index fund from Vangard, which does well. No managed accounts. I totally agree with Buffet, managed accounts are stupid.
For a stock like Apple, I agree with Buffet, the aim is to hold the shares, as he says, "forever". That may not be realistic, but it's the goal. I'm considering Facebook and Alibaba in the same category.
You do what I do, you totally ignore fluctuations. I ignored it during the recession. I ignored it end of 2015, and I'll ignore them moving forwards. Investing successfully means that you never panic. If you have cash, you pile on. Of course, you need to have a good company. On paper, I "lost" millions when the stock dropped as much as it did several times. But by ignoring that, and buying more, when possible, those holding went to ever higher levels, as I'm confident they will continue to do.
i fully believe that Apple will cross $200 at some point. Will that happen this young year? Maybe, but not likely. Over the next several years it will though. But it may regress in between now and then. Don't worry. Again, as Buffet said in his yearly note, the worst thing is your fear. Don't be afraid.
Samsung is Samsung's #1 supplier and customer. And Samsung has plenty of customers other than Apple and itself. Some of whom are other suppliers such as those who sell components to Apple but then turn around and have Samsung manufacture them, as is often the case with TSMC and Ax SOCs that TSMC cannot make themselves, or at least not at the volume that Apple needs.
I have seen a lot of Apple fans claim that Apple needs to retaliate against Samsung like this, but Samsung is the #1 component company in the world with tons of customers. It would not hurt Samsung nearly as much as such people believe but it WOULD impact the quality and availability of Apple products as Samsung is #1 in components for a reason. I bet more than a few Mac owners wish that Samsung was supplying the Apple designed PC CPUs instead of relying on Intel, who is frequently late and often go years without significant performance improvements.
so last year, Apple split off the manufacturing of their chips to both Samsung and TSMC. We all know this. TSMC never "gave" Samsung part of that order,
Apple did. In order to do so, Apple had to engineer the chips for both processes. TSMC's 16nm process was found to be 20% more power efficient than Samsung's 14nm process, which is one reason Apple is having TSMC do all of their SoCs this year.
when Apple moved from Samsung, Samsung lost almost 40% of their semiconductor business. So don't give us nonsense about what happened. You can read the truth in the professional computer sites and the financial pages. Samsung had to offer discounts to obtain more customers to replace Apple.
you sound like a Samsung plant who doesn't know what he's talking about.
What I think is happening here is that OLED displays are simpler to manufacture because instead of three layers - filters, LCD and backlight, plus two power supplies, one for the LCD and one for the backlight, OLED offers simplicity, and thinness. It also offers bendable displays. I hope Apple won't go the curved edge Samsung has gone with their phones, unless they come up with a real use case, as Samsung has failed to do so far.
but OLED also offers pretty much edgeless designs, which is extremely difficult to do with LCDs. There is just one manufacturer of edgeless LCD panels, and they are a small company, and don't make the ips displays Apple needs.
you can also have holes in an OLED display which is also almost impossible with an LCD, and, in addition, there is the possibility of the always on time, weather, or other function that Android OLED phones offer because of the tiny power draw when just a few words or graphics are displayed at once. We can't get that with LCD either.
its these features, and possibly more, that makes OLED so desirable. In the past, the deficits of going OLED overpowered the benefits.
so, yes, OLED offers a lot for Apple, as long as they are now convinced that the longetivity and quality of the displays are up to their standard, and the price is right. As going OLED is what makes these features possible, then sure, going OLED will lead to the increase in sales.
one problem is that while is really slightly greenish. That apparently can't be helped because the brightness of the red and blue subpixels can't be brought up enough to sompensate. The second problems is that at the same resolution as an LCD screen, b3cause of the extra green sub pixel, thgraphics and text look coarse. This is a major reason why those displays have such a high resolution. A Pentile display needs to be about 30% higher Rez to look as sharp as an LCD.
so what will Apple be doing here? I know it's said that Samsung owns 97% of all OLED patents, but Apple has some important OLED patents as well, though just a few. A major question I've been asking, but can't get an answer to, is what Apple has with the Apple Watch display. That display is rated to 1,000 nits in direct sunlight, which is much brighter than any other commercial OLED display. Samsung's reaches over 600 nits in direct sunlight, but much dimmer otherwise. So the question is whether Apple has done something special with that OLED to get to that brightness, over twice the original Apple Watch brightness, or whether they just boost it way up because they figure that people don't look at a Watch display for anywhere near the time they look at a smartphone display, and so the shortened display life isn't an issue.
putting my watch under a 200x high quality microscope I see the pixel config is a strange one. We have a rectangular red sub, then separated by a large black space, is an almost square green sub, larger than the red in height. Then alongside those two. A long blue sub. An odd configuration I'm not familiar with anywhere else. Lots of black between the sub pixels.
So supply constraints are going to restrict availability of a feature that may, or may not, be available in a phone model that may, or may not, be on sale in 7 months time.
I'll add that due to a lack of availability of Di-Lithium doped Kyber Crystals, the protective force-field I predicted earlier will only be available on the iPhone 8X++ with the Unicorn Horn finish.
Do I win at punditry now?