After pandemic-induced supply chain complications and other delays hampered Apple's rollout of its first 5G-enabled generation of iPhones last year, Apple's leadership in Cupertino can finally confirm that it's shooting to ship at least 10MM more iPhones - 90MM in total, a 20% increase compared with roughly 75MM last year - for the new generation of its flagship smartphone that's expected to launch as soon as September (two months earlier than last year's October rollout, which was a one result of the pandemic).
To be sure, the final number might miss the 90MM target by a few million, but the improved whisper guidance - first reported by Bloomberg - has already excited traders, who are bidding up names of Apple's suppliers in the Asian session.
Disappointing numbers on units shipped for the company's first 5G phone models helped weigh on the company's share prices over the last year. Apple has only just touched new all-time-highs after underperforming its FANG rivals over the past year.
In the latest sign that "nature is healing", the coterie of suppliers responsible for producing components for Apple's phones are ready to boost production by 20% for the upcoming generation of phones. Apple is planning updates for all of its models, including the 5.4-inch and 6.1-inch regular versions and the 6.1-inch and 6.7-inch Pro models. The phones have been codenamed D16, D17, D63, and D64. Already, there have been a smattering of rumors about possible new features, including a longstanding rumor that Apple is working on a "foldable" phone.
Many of the new features for screens and other components show that the global microchip shortage won't be a problem for Apple, which is the biggest customer for TSMC, the Taiwanese chip maker that has seen its role in the global economy increase in importance amid a brutal shortage of chips that is causing production delays for everything from laptops to new cars.
At least one of the new phone models to be introduced later this year will feature an LTPO (low-temperature polycrystalline oxide) display capable of alternating its refresh rate based on the content being shown. Apple is already using this tech for its Apple Watch for several years (th feature helps preserve battery power for the Apple Watch).
Rivals including Oppo, OnePlus and Samsung Electronics already have LTPO screens in their flagship phones. The new iPhones with the LTPO displays will also use IGZO to improve their power efficiency and responsiveness.
Another new feature: Apple plans to shrink the size of the "notch" that houses the cameras used for its facial recognition technology to match its rivals. The notch will likely continue to shrink on future generations of the phone until it disappears completely in some future model.
Upgrades for the iPhone camera will focus on improving the quality of dynamic digital video. In addition to improved zoom, the camera will benefit from powerful new chips: an upgraded system-on-chip (built around the same six cores as the current A14 chip) will also be included.
Shares of Apple suppliers like TSMC climbed in premarket trading on the news. Taiwanese connector and power-pack maker Cheng Uei Precision Industry climbed as much as 9% while lens maker Largan Precision rose as much as 2.4%. Japanese electronic component makers Alps Alpine climbed as much as 3.5%, and Renesas Electronics increased by as much as 2.6%. Citigroup also raised its profit estimates for America's largest company by market capitalization on the news about the new iPhone.
Looking ahead to the US and European sessions, investors should watch semiconductor and semi-equipment stocks in Europe, especially Apple suppliers like Dialog Semi, STMicro, AMS, Infineon and IQE.
Apple is recognized for having one of the most tightly organized global supply chains of any company in the world. But at the end of the day, whether the next model is deemed a success or failure (from a sales perspective) will depend on how readily Chinese consumers embrace Apple products despite growing tensions between the West and Beijing.