Cowen: Apple’s button-free iPhone may have to wait

But the launch next September will still be “yuge,” says analyst Timothy Arcuri.

Excerpts from a spec-packed note to clients that fell into my inbox overnight:

Our field work continues to support a feature-rich launch w/three models (5.8” in addition to existing 4.7/5.5” in terms of panel sizes), but no signs of an early launch this year. Our checks show that all 3 models will likely be using glass casing with materials from Corning. The 5.8’’ version will likely use stainless frame that is harder while the other two models’ frames remain aluminum. The 5.8’’ version adopting OLED display has become consensus since we published on this last year… We continue to see a “wraparound” design using “fixed flex” screen from Samsung as the PCB appears to be only 5.1-5.2’’. The PCB itself would be higher-end, substrate-like, and thinner, however with low yield which is a contributing factor to the uncertainty around the ultimate SKUs, how many will use OLED, etc. The panel choice for the other two models is still keyed to two main factors: 1) Samsung’s ability to supply 100MM OLED screens in ’17 (not a concern of ours) and 2) more significantly, digestion of current LCD inventory for which AAPL has already pre-paid.

On facial/gesture recognition, the 5.8’’ version might be the only one that will adopt 3D sensing, for which 3 new sensors would be added on the front side of the phone, including an infrared sensor from Heptagon/AMS, a laser emitter from Lumentum/ Finisar and a CMOS sensor from STM. On the back side, 5.8’’/5.5’’ will have two cameras, while the 4.7’’ model will stick to one camera. Relative to under-glass fingerprint sensors, our checks indicate no breakthrough so far (capacitive ones can’t sense through a full thickness cover glass of 500+ microns), therefore we might not see a bezel-free design with Touch ID integrated under the glass and in the active display area this year. Regarding other key components, baseband modem still appears likely dual-sourced from INTC/QCOM though given INTC’s performance issues with the 7360, the mix could ultimately be more skewed toward QCOM. And we should finally see wireless charging with AVGO as the IC supplier.

Rating: Outperform. Price target: $135.

Of the half-dozen charts in Arcuri’s note, this was my favorite:

Click to enlarge. Not seeing the graphic? Try the website. 

3 Comments

  1. David Emery said:

    Uh, “outperform,” a ‘yuge’ launch coming, and his target price is below yesterday’s close? One of these things is not like the others.

    3
    February 17, 2017
    • Fred Stein said:

      Yeah. agree. And PED3’s fav chart is my fav too. It provides the best visual of the “unfair compare”. The seasonal peaks consistently get higher and steeper, except for Yuge bump for pent-up demand for larger screens.

      1
      February 17, 2017
      • David Drinkwater said:

        And to add to that, we don’t know how steeply (or no so steeply) peak demand for C2016Q4 is going to slide into C2017Q1 – to say nothing of 2017Q2, Q3, Q4, and 2016Q*.

        It does look like Arcuri is using Apple’s calendar, not Gregorian, so 2017Q1 is actuals, not estimates, but, come on, let’s be honest amongst ourselves: estimates are just guesses.

        0
        February 20, 2017

Leave a Reply