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Apple’s Early Success with the iPhone 12 Leads to Optimistic Forecast of 235m phones Up 17.5% Y/Y
The success of the iPhone 12, be it for a small segment in Q320 and a sharp upward ping so far in Q420, has led to an iPhone production forecast, raising the 2020 forecast from 212m units to 218m units (up 12% Y/Y) although shipments will come in around 200m units even as global smartphone shipment are 10% Y/Y at around 1,300m units, Apple is as an outperformer. For 2021, expect robust momentum in 1Q and a weaker performance in 2Q. For the full year, then Apple forecast is 235m units up 17.5% Y/Y. Unlike 2020, production should be in line with demand. Sales of the iPhone 12 series have been lower than expected for the iPhone 12 Mini and the iPhone 12, but better than expected for the iPhone 12 Pro and the iPhone 12 Pro Max. Sales of existing models (iPhone 11, iPhone SE 2nd Gen) remain strong. Apple appears to be targeting 1Q 2021 production of 70-73m. but production is likely to fall short at 62m units (up 64% Y/Y. 2Q shipments are estimated at 44m (flat Y/Y) due to inventory adjustments. The key implications for the value chain are:
Q420 production is expected to be 91m up 27% Y/Y, up 100% sequentially with new models the main driver. The 6.67" Pro Max is expected to be 16m, the 6.06" Pro (13m) and the 6.06” iPhone 12 (24m). The outlook for 5.42" models is 17m. Shipment volume in Q121 is expected to be up 60%+ with a forecast of 62m (up 64% Y/Y, down 31% sequentially). In terms of sales of new models, expect poor sales of the Mini and slightly weak sales of the iPhone 12, but better-than-expected sales of the Pro and Pro Max. Forecasts were lowered for the iPhone 12 Mini and maintained for the iPhone 12 unchanged, up for the iPhone Pro, and flat to Q121 for the Pro Max. Apple is targeting 70-73m, but there could be a 10m shortfall.
For Q221, production volume of 44m units (flat Y/Y; down 29% sequentially). Q220 220 forecast are constrained by the impact of inventory adjustments, as production of older products in 2020 was higher than actual demand, and production of new models in 1Q 2021 is likely to be high.
Full-year 2021 forecast: Production forecast for 2021 is 235m units in line with demand. Some industry sources suggest that Apple is targeting production of 260m- 275m units, although the probability is low and the bearish case as 213m units. The four new models scheduled for release in 2H all have the same display size as this year, and although further improvement to camera functions is expected, we do not see any other compelling sales points (some app improvements likely include ToF camera support). At this point, production for 2H21, is forecast at 129m units, or less than the 136m units in 2020. Even though sales of older LCD models, such as the 11 and SE2, remain brisk now, the OLED ratio in 2021 is expected to grow because all new models this year and next are OLED models while new LCD models will likely be released in 2022 and 2023. Total production of OLED models should rise by 43% to 175m units, overtaking production of LCD models, which should fall by 34% to 81m units. Samsung Display will provide all models), LG Display (5.42” added from 2021 models), and BOE (6.06” only). There is some risk to shipment trends for LG Display and BOE, however, owing to the increased difficulty of manufacturing, including from the adopting of Y-Octa internally integrated into touch panels for 2021 models and the increase of four masks on the TFT side to support LTPO. BOE received final authorization, although it is carrying out trial production at B7 (Chengdu: TFT+OLED/B11: assembly) of iPhone 12 (6.06”) panels that do not employ Y-Octa (the touch panel is externally attached) for this year’s models. It will be challenging for BOE to achieve volume shipments in 2021 amid the increased difficulty of manufacturing. There is a high probability of a large market share increase for LCDs by Sharp, which acquired the buildings and infrastructure of the Hakusan plant from JDI (with Apple acquiring the equipment). That being said, there are still a lot of uncertainties, including the total volume and moves by LG Display and JDI.
There is a high probability of new LCD models (SE3) being launched in 2022 as a result of the acquisition of JDI’s Hakusan plant by Sharp and LCD models should remain popular through to 2025-26.
Table 1: Apple iPhone Production Forecast
The success of the iPhone 12, be it for a small segment in Q320 and a sharp upward ping so far in Q420, has led to an iPhone production forecast, raising the 2020 forecast from 212m units to 218m units (up 12% Y/Y) although shipments will come in around 200m units even as global smartphone shipment are 10% Y/Y at around 1,300m units, Apple is as an outperformer. For 2021, expect robust momentum in 1Q and a weaker performance in 2Q. For the full year, then Apple forecast is 235m units up 17.5% Y/Y. Unlike 2020, production should be in line with demand. Sales of the iPhone 12 series have been lower than expected for the iPhone 12 Mini and the iPhone 12, but better than expected for the iPhone 12 Pro and the iPhone 12 Pro Max. Sales of existing models (iPhone 11, iPhone SE 2nd Gen) remain strong. Apple appears to be targeting 1Q 2021 production of 70-73m. but production is likely to fall short at 62m units (up 64% Y/Y. 2Q shipments are estimated at 44m (flat Y/Y) due to inventory adjustments. The key implications for the value chain are:
- While caution is warranted regarding the risk of adjustments and news flow related to iPhone 12 Mini and iPhone 12, solid momentum compared to 1Q 2021, (even with the decline in AP orders to foundries because sufficient volumes for relevant models have largely been secured);
- With 8% growth for full-2021, Apple’s target of 260-270m is not very realistic.
- 2021 models will feature further camera-related upgrades, which should be positive for manufacturers of CMOS sensors, lenses, related components & materials and modules.
- OLED volumes will surpass LCD volumes for the first time in 2021, for LCD, market share could consolidate at Sharp, which purchased the Japan Display plant, but uncertainty remains.
Q420 production is expected to be 91m up 27% Y/Y, up 100% sequentially with new models the main driver. The 6.67" Pro Max is expected to be 16m, the 6.06" Pro (13m) and the 6.06” iPhone 12 (24m). The outlook for 5.42" models is 17m. Shipment volume in Q121 is expected to be up 60%+ with a forecast of 62m (up 64% Y/Y, down 31% sequentially). In terms of sales of new models, expect poor sales of the Mini and slightly weak sales of the iPhone 12, but better-than-expected sales of the Pro and Pro Max. Forecasts were lowered for the iPhone 12 Mini and maintained for the iPhone 12 unchanged, up for the iPhone Pro, and flat to Q121 for the Pro Max. Apple is targeting 70-73m, but there could be a 10m shortfall.
For Q221, production volume of 44m units (flat Y/Y; down 29% sequentially). Q220 220 forecast are constrained by the impact of inventory adjustments, as production of older products in 2020 was higher than actual demand, and production of new models in 1Q 2021 is likely to be high.
Full-year 2021 forecast: Production forecast for 2021 is 235m units in line with demand. Some industry sources suggest that Apple is targeting production of 260m- 275m units, although the probability is low and the bearish case as 213m units. The four new models scheduled for release in 2H all have the same display size as this year, and although further improvement to camera functions is expected, we do not see any other compelling sales points (some app improvements likely include ToF camera support). At this point, production for 2H21, is forecast at 129m units, or less than the 136m units in 2020. Even though sales of older LCD models, such as the 11 and SE2, remain brisk now, the OLED ratio in 2021 is expected to grow because all new models this year and next are OLED models while new LCD models will likely be released in 2022 and 2023. Total production of OLED models should rise by 43% to 175m units, overtaking production of LCD models, which should fall by 34% to 81m units. Samsung Display will provide all models), LG Display (5.42” added from 2021 models), and BOE (6.06” only). There is some risk to shipment trends for LG Display and BOE, however, owing to the increased difficulty of manufacturing, including from the adopting of Y-Octa internally integrated into touch panels for 2021 models and the increase of four masks on the TFT side to support LTPO. BOE received final authorization, although it is carrying out trial production at B7 (Chengdu: TFT+OLED/B11: assembly) of iPhone 12 (6.06”) panels that do not employ Y-Octa (the touch panel is externally attached) for this year’s models. It will be challenging for BOE to achieve volume shipments in 2021 amid the increased difficulty of manufacturing. There is a high probability of a large market share increase for LCDs by Sharp, which acquired the buildings and infrastructure of the Hakusan plant from JDI (with Apple acquiring the equipment). That being said, there are still a lot of uncertainties, including the total volume and moves by LG Display and JDI.
There is a high probability of new LCD models (SE3) being launched in 2022 as a result of the acquisition of JDI’s Hakusan plant by Sharp and LCD models should remain popular through to 2025-26.
Table 1: Apple iPhone Production Forecast
Table 2: 2021 New iPhones
Table 3: iPhone Panel Supply Forecast (LCD/OLED By Model)
Note: Actual figures are estimated by Mizuho Securities. E=forecasts by Mizuho Securities Source: Mizuho Securities Equity Research
Figure 1: iPhone Panel Supply Forecast (LCD/OLED by supplier), 14 December 2020
Note: Actual figures are estimated by Mizuho Securities. Source: Mizuho Securities Equity Research
Figure 2: iPhone Display Roadmap: differentiate high-end model from mid-end
Figure 2: iPhone Display Roadmap: differentiate high-end model from mid-end
iPhone Production Outlook 7
