How Apple’s iPhone 6 Prices Can Help Its Asian Suppliers

The debut of the iPhone 6 wasn’t just a big moment for Apple . It marked a major event for manufacturers in Taiwan and elsewhere in Asia that make the components for the device. Before the launch, many observers worried that Apple might repeat the mistakes of the iPhone 5S and 5C. With prices too high for many consumers, the last round of iPhones had limited upside for the Asian supply chain. Adding to the concern were leaks about the iPhone 6’s new features, including a larger screen, that could make the handsets even pricier, compared to phones from Samsung , as well as low-cost Chinese brands such as Xiaomi, Lenovo , and Huawei.
The announced prices of the iPhone 6, which start at $199, have brought some cheer to investors who follow Apple’s supply chain. The new phone has “a larger screen, bigger battery, more storage, so from a bill of materials perspective, that is more expensive,” Barclays analyst Kirk Yang said on Bloomberg Television. “People were a little bit worried it could be more expensive, but it came out at the same price.” That, he added, is “actually quite good for the Asia supply chain.”[eap_ad_2] Taiwanese companies assembling the new iPhone may include Hon Hai, Pegatron, and Wistron. Hon Hai, also known as Foxconn, is likely to be the biggest beneficiary, with 65 percent of the orders for the smaller phone and nearly all the orders for the larger one, according to Yuanta Financial. Pegatron is likely to receive 20 percent of iPhone orders next year, analysts Sherman Shang and Calvin Huang of SinoPac Securities wrote in a report issued on Wednesday.
The Sinopac pair also thinks there’s still life in the older generation of iPhones because Apple will now make them less expensive: “As Apple cuts price for iPhone 5c to target low-price segment, Wistron is set to benefit and has very good chance to produce other” models for Apple,” they wrote.
Other suppliers of components for the iPhone 6 may include TSMC, which makes Apple’s A8 application processor; display makers Sharp, LG Display, and Japan Display; Wintek, which makes touch panels; and Apple’s bitter rival Samsung Electronics, which not only competes against Apple with the Galaxy line of smartphones but also supplies Apple with mobile DRAM chips.
One smaller Taiwanese company poised to do especially well is Largan Precision. Based in the central Taiwanese city of Taichung, the company makes lenses and other components for smartphone cameras; while few consumers know anything about Largan, its Taiwan-traded shares have doubled in valued this year. According to data compiled by Bloomberg, analysts expect Largan’s sales in the second half of the year to surge 55 percent, compared to a year ago, with the company likely to enjoy revenue of 25.6 billion Taiwan dollars ($853 million). That’s far better than expected growth of 16 percent for the MSCI Taiwan Technology Index.
Little Largan may be unknown to consumers, but it is a hot growth company because of optimism about its ties with Apple. Largan may receive almost all the business supplying the back camera for the new iPhones, according to Yuanta. (Business Insider)[eap_ad_3]

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