Apple’s ‘iPhone 8': Adding Too Many Features Backfiring, Says SusquehannaSusquehanna is the second shop this week to revive concerns Apple is struggling to integrate a fingerprint sensor, which will likely result in a lag in how fast the devices become available when it goes on sale, presumably later this year.
By
Tiernan Ray
July 11, 2017 12:01 p.m. ET
Susquehanna Financial Group analyst Mehdi Hosseini, who follows shares of Corning ( GLW) and Universal Display ( OLED), among others, today cuts his estimates for Apple’s ( AAPL) likely pace of manufacturing for its presumed forthcoming iPhone 8, based on talks with contacts in Asia who confirm to him that Apple is struggling to integrate the fingerprint I.D. sensor underneath the device’s display.
“Adding too many features appears to be backfiring,” quips Hosseini, after concluding Apple might have to leave out the fingerprint function altogether from the more-expensive models of iPhone.
Hosseini’s note is similar to one put out yesterday by KeyBanc’s Andy Hargreaves. Like Hargreaves, Hosseini concludes that Apple has just weeks to find a solution or else ditch the fingerprint sensor:
Recent checks confirms the recent media reports regarding Apple facing integration challenges with the OLED version of i8. Specifically, the challenges are associated with integrating finger print into OLED display. Our checks with contacts in Korea suggest Apple is currently contemplating two options: (1) using software to resolve the hardware challenges, (2) removing the finger print option altogether. We expect a final decision by mid August, with final tests and trial concluding by mid September.
He cuts his “build” estimate for the iPhone 8 for the second half of this year to 90 million from 100 million.
Hosseini, who has a “Positive” rating on Universal and Corning, notes that there won't likely be any harm to their prospects of sales into the iPhone, because there will simply be a lag in the actual manufacturing of the iPhone, in the worst case:
We expect the shortfall to i8-OLED build forecasts for 2H17 to be made up in 1Q18 timeframe. Thus, at this juncture, we do not see any material downside risk to our estimates for companies under our Display coverage (OLED, COHR, GLW). Saying it differently, the finger print option will not impact companies under our Display coverage. |
