Better-than-feared external environment vs low iPhone 13 estimates
Market sales forecasts are gloomy for the iPhone 13 series, which is scheduled to be rolled out from 2H21. But, we believe these low expectations spell investment opportunities, given lessening competition for flagship models, full-scale global 5G telecommunication services, and easing supply shortages for semiconductors. As suppliers of parts to a major North American player, LG Innotek and BH Supplier look well situated to benefit amid this backdrop.
We mainly attribute the downbeat sales projections for the iPhone 13 series to: 1) the fact that it is difficult to record strong sales for two consecutive years in the wake of strong sales for the preceding iPhone 12 series; and 2) semiconductor supply shortage worries.
However, we expect iPhone 13 sales to prove higher than the current tepid expectations. We point out that Huawei, the iPhone’s biggest competitor in the Chinese and European flagship smartphone markets, is uncertain about its new model launches in 2H21. Moreover, the iPhone series should benefit from increased demand for 5G smartphones stemming from the arrival of full-fledged global 5G communication services.
External environment (semiconductor supply) looks better than feared: Likely beneficiaries
In terms of supply, lack of semiconductor supply is to remain an issue through the rest of 1H21, but we view the external environment as being better than feared, believing that TSMC will prioritize the production of A15, which is to be installed in the iPhone 13 series.
This better-than-expected landscape should serve to benefit of LG Innotek, BH, ITM Semiconductor, and Derkwoo Electronics, all of which supply parts to a major North American player. As valuations for these companies have been dampened as of late by the concerns towards iPhone 13 sales, we believe that their share prices will rise significantly upon the appearance of favorable sales for the series. Businesskorea