With Apple’s (NASDAQ:AAPL) next-generation iPhone expected to be released in two larger screen sizes of 4.7 inches and 5.5 inches, the debut of the so-called “iPhone 6” is gearing up to be one of the biggest and most highly anticipated iPhone launches in the company’s history. However, a new research note issued by a well-connected analyst is throwing some doubt on the widely predicted September launch date.
Less than a week after pushing his estimated date for the mass production of Apple’s iWatch into November, KGI Securities analyst Ming-Chi Kuo is now also revising his expected launch date for the 5.5-inch version of the iPhone 6. According to the analyst, yield issues with some the larger iPhone’s key components could push the launch of the 5.5-inch iPhone 6 past October and even into next year.
“We think the 5.5-inch model will also have issues with the yield rate of in-cell touch panel and color unevenness of metal casing. Indeed, these problems will likely be even more complicated with a larger size,” wrote Kuo in a note to investors obtained by 9to5Mac. “In addition, from a technical perspective, we don’t expect sapphire cover, used for the first time on the 5.5-inch model, will easily pass the drop test near term. We are conservative about 5.5-inch iPhone launching by end-2014. Even if the product is launched in 2014, it is likely to take place after mid-4Q14, which is later than the September-October of consensus, with shipments being lower than consensus of 15- 20mn units.”
According to Kuo, similar problems are causing “production bottlenecks” with the 4.7-inch iPhone 6 as well, reports MacRumors. However, the issues are apparently easier to resolve on the smaller model. The in-cell touch panel production issues may be related to the implementation of a new, thinner display technology. Late last month, supply chain sources cited by the China Times suggested that Apple had reduced the number of brightness enhancement films (BEFs) used in the iPhone 6 from two to one. At least one of Apple’s suppliers has been struggling with yield issues due to the change, according to the sources.
More evidence that Apple’s next-generation iPhones will feature sapphire display covers emerged last week when multiple videos of alleged iPhone 6 sapphire covers being subjected to stress tests were posted online. Although it has long been known that Apple has been interested in sapphire due to the $578 million investment that it made in sapphire manufacturing facilities run by GT Advanced Technologies (NASDAQ:GTAT) last year, it was unknown how the sapphire would be used. However, the sapphire iPhone 6 cover videos appear to confirm investigative research done by PTT Research analyst Matt Margolis, who noted that Apple has likely secured enough sapphire to cover both iPhone models and the iWatch.
While Apple has yet to announce any launch dates for the next-generation iPhone models, the company was widely expected to release the new devices on a Friday in September, as it has done over the past two years. Insider sources cited by China’s Tencent Digital News have even forecasted a specific date of Friday, September 19.
The news of a possible delay with the launch of the 5.5-inch iPhone 6 comes after Canaccord Genuity analyst T. Michael Walkley raised his price target on Apple shares to $112 from $102 based on expected record sales for the iPhone 6, reports The Street. The firm’s move followed a report from Taiwan’s Business Weekly that Apple placed an initial order for 68 million iPhone units, more than twice the number that the Cupertino-based company ordered for the iPhone 5 in 2012. However, it is unclear if the estimate provided by the supply chain sources cited by Business Weekly were taking the rumored 5.5-inch iPhone 6 production delays into account.
While a delayed 5.5-inch iPhone 6 launch would undoubtedly have some effect on Apple’s sales numbers, it will likely have less of an impact than a delay in the launch of the 4.7-inch model would. According to the Taiwan-based market research firm Topology Research Institute via Economic Daily News, Apple is projected to sell approximately 70 million 4.7-inch iPhone 6 units, but only 8 to 10 million units of the 5.5-inch model. Still, the 5.5-inch model is expected to play a key role in helping Apple expand its footprint in China’s rapidly growing smartphone market. According to data from market research firm Canalys, 39 percent of total smartphone shipments in the Greater China region in the first-quarter of 2014 came from devices with screens five inches or larger.
Besides the rumored screen size increases, Apple’s next-generation iPhones are also expected to feature typical hardware upgrades, such as a faster A8 processor, a higher resolution display, and a better camera. Other rumors from supply chain sources cited by China’s Laoyaoba website have suggested that the devices could feature an advanced haptic feedback technology. Apple is also expected to refresh its iPad product line sometime this fall, followed by the release of the wrist-worn wearable tech device that has been dubbed the iWatch.
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