Share quotes of Apple suppliers fell after forecasts that Apple in the first quarter of 2021 will load “only” 80% of 5nm TSMC capacities instead of 100% in the fourth quarter of the outgoing year. It is believed that this is due to the relatively low demand for the iPhone 12 series. However, the well-known analyst at TF Securities Ming-Chi Kuo believes that not everything is so simple.
The market shouldn’t pay too much attention to how much of TSMC’s 5nm production is used by Apple, he said. Changes in Apple’s production volumes are more likely due to seasonality than low demand for iPhone 12. In an analytical note for investors, the analyst writes that it would be overly optimistic to believe that Apple’s 5nm capacity utilization by Apple in the first quarter of 2021 will be at the same level of 100%. “If the fall in the stock was caused by misguided expectations, its price is likely to rise again soon,” – suggests Mr. Kuo.
Calculations by TF Securities show that in fact, Apple’s orders for components for the iPhone 12 in the first quarter of 2021 will be slightly higher (by 3-5%) than in the same period a year ago. And in the second quarter of 2021, according to analysts, Apple should ship at least 45 million smartphones to the market – significantly more than 36 million units in the second quarter of 2020.
Moreover, Ming-Chi Kuo says demand for the iPhone 12 Pro series is significantly higher than expected. Because of this, there was a shortage of camera modules, the lead time of which at sole supplier – Sony – up to 14 weeks. The analyst expects that there will be some shortage of flagship iPhones in the short term. In general, according to TF Securities, the overall dynamics of consumer interest in iPhones is still higher than in Android devices, and the demand for Apple smartphones is still unabated.
This change in the utilization of 5nm production facilities is unlikely to affect TSMC’s revenue either. In October, financial results showed that only 8% of total silicon wafer revenue came from 5nm orders. In addition, unused Apple capacities can be loaded with orders from other manufacturers.
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