As anticipated, Apple announced four iPhone 12 models (12 mini, 12, 12 Pro, 12 Pro Max), featuring 1) 5G support (including mmWave), 2) 3D LiDAR sensors in top two models, 3) 12 Pro Max with 6.7” screen (largest screen ever), and 4) removal of in-box charger adapter and earpods. Apple also launched HomePod Mini at $99 with improved sound quality and interoperability feature across Apple devices. Overall, we think both spec and pricing came as expected, and iPhone 12 is set to be Apple’s most important product cycle since iPhone 6 in 2014. We continue to favor Apple supply chain over Android camp, and reiterate Buy on Luxshare/Goertek for share gain and AirPods/Watch, FIT Hon Teng for Belkin TWS/wireless charger, and BYDE for Apple share gain and Watch components.
- iPhone 12 is the most important iPhone cycle since 2014. We think new iPhone’s major upgrades focus on camera improvement whereas top two models (12 Pro, 12 Pro Max) will come with 3D LiDAR sensors that can enhance AR, autofocus, and dark shots, while cheaper models feature dual-cam systems. Also, all iPhones 12 will exclude charger adapter and in-box earpods, which is largely in line and benefits wearables/accessories suppliers. iPhone 12/12 Mini will be available for pre-order on 16 Oct (shipment on 23 Oct), while 12 Pro/Pro Max can be pre-ordered on 6 Nov (shipment on 13 Nov). Starting price at $699 for iPhone 12 mini is also in-line with expectations.
- HomePod mini to enhance smart home ecosystem. HomePod mini priced at $99 will come with UWB (ultra wide band) feature which allows Siri to manage multiple devices through Apple smart home system. While its price is more expensive than peers such as Google Nest mini and Amazon Echo Dot, we think HomePod mini is regarded as home hub to access all Apple smart home accessories, and it is well positioned to penetrate into existing large Apple TV user base.
- Expect strong 5G iPhone cycle in 4Q20-1H21E. Given one-month launch delay this year, we estimate iPhone shipment will decline 3% YoY to 45mn in 3Q20E and then rebound 2%/36% YoY to 75mn/50mn in 4Q20E/1Q21E. We expect further upside if overseas carriers (e.g. US) plan to accelerate 5G subscriber penetration by offering attractive subsidy or trade-in plans.
- Prefer Luxshare, Goertek, FIT and BYDE for wireless/wearables trend. Since most components will be under ASP pressure due to higher 5G-semi BOM cost in iPhone 12, we prefer Apple names with share gain and wireless /wearables beneficiaries. We reiterate Buy on Luxshare/Goertek as AirPods suppliers, FIT Hon Teng for Belkin TWS/wireless charger, and BYDE for Apple share gain and iPad/Watch components.
