| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 2854 Registered: 05-2011 Rating: N/A |
Apple (AAPL +3%) is bearing fruit today after Nikkei Asia reported that the iPhone giant is planning to produce up to 96 mln iPhones in the first half of 2021, a nearly 30% yr/yr increase. https://asia.nikkei.com/Business/Technology/Apple-plans-30-boost-in-iPhone-production-for-first-half-of-2021 The tentative production plan for 2021 is nearly on par with the record 231.5 mln iPhones shipped in 2015. However, the article also noted that industrywide shortages of key components could threaten that target. Nevertheless, this was a bullish outlook. So, what does this mean? Recall that Apple unfortunately did not provide specific Q1 (Dec) guidance when it reported Q4 (Sep) results in late October. Therefore, it's only through reporting like this that we have a sense of what to expect when Apple reports DecQ results in late January. It also bodes well for MarQ. With Apple having rolled out its first 5G phone in November, we had already suspected that demand was robust, and this substantial increase in production goals only confirms our belief. In most years, Apple's new iPhone launches have included just incremental improvements, like better chips or better cameras. This year's model, though, was a big step up, as Apple finally launched its long-awaited 5G iPhone. These production numbers are great evidence that consumers were chomping at the bit. Production numbers like this change the narrative. We have heard a lot in recent years about how iPhone unit sales were slowing after Apple posted two consecutive years of smartphone shipment declines in 2018 and 2019. Growth appears to be back on the horizon in 2020 and 2021. However, when Apple rolls out its next phone in Sep/Oct 2021, we think investors should brace for another decline because Apple will be lapping the surge from the 5G rollout. Our overall sense is that this talk of unit sale declines is generally not a big deal. Once a product like Apple's iPhone reaches such a massive scale, investors should not be expecting great growth numbers in perpetuity. The production boost is also great news for Apple suppliers. Names with the biggest Apple exposure include Cirrus Logic (CRUS), which got 79% of its FY20 revenue from Apple, and Skyworks Solutions (SWKS), which derived 56% of FY20 revenue from Apple. Qorvo (QRVO) derived 33% of its FY20 revs from Apple. Others include QCOM and TSM. Overall, this production goal from Apple is great news for the company. With Apple not offering guidance itself, we have to rely on articles like this one. This certainly confirms our belief that Apple's iPhone 12 sales have been robust and sets up what should be very strong DecQ numbers in late January. The main thing that could trip this up are component shortages, but demand certainly seems not be an issue. |