Analysts from Bank of Merrill Lynch (BAML) are out with a new research note on Apple Inc. (NASDAQ:AAPL) in regards to memory chips. The analysts note that the have recently observed three interesting developments regarding Apple Inc. (NASDAQ:AAPL): 1) potential introduction of low-end iPhone (US$250-300 ASP likely but high-end 4″ in-cell panel likely embedded similar to current iPhone 5), 2) potential delay of large size new iPhone production (5″ range), and 3) MacBook PC price cut.
BAML believes that the overall impact on memory chips should be mixed given both upside/downside to DRAM and NAND are well anticipated: 1) upside from higher sales volume of iPhone driven by low-end models in emerging markets vs limited memory chip content growth given low-end iPhone promotion; 2) potential problems to get enough 5″ in-cell panels for the high-end iPhone due to low yields or LTPS capacity constraints among LCD makers; and 3) unfavorable implication of MacBook price cut promotion, weaker demand for Apple Inc. (NASDAQ:AAPL)’s PC.
Apple Inc. (NASDAQ:AAPL)’s new phones (4″ low-end, 5″ high-end, etc) are not well guided, but the analysts don’t see yet any new catalysts for memory chip demand, and worry about cannibalization of high-end (if 4″ low-end iPhone comes), execution (if 5″ in-cell panel cannot be adequately supplied) and PC downturn (if price cut pressure continues).
BAML’s new checks indicate a higher risk to NAND price given weaker chip orders from OEMs ex-China. Major chipmakers have alluded to almost flat booking QoQ YTD (or down ex-China OEMs), thus seasonally weaker chip demand from China OEMs after CNY holidays may accelerate NAND price corrections.
However, Korean chip makers reiterate good sentiment for PC DRAM contract price (further hike even after CNY holidays) due to the recent strong spot and China OEMs’ inventory build-ups coupled with massive DRAM supply cut among Taiwan chip makers a quarter ago (lagging impact on actual chip supply). Even so, the analysts still expect PC DRAM spot price to weaken post-CNY holidays because of deep downturn in overall PC supply chain, even Apple Inc. (NASDAQ:AAPL) cut its latest 13″ MacBook Pro price by 12% last week. Next week’s spot market will still be quiet due to CNY holiday sentiment (eg, slow PC production).
Apple Inc. (NASDAQ:AAPL)’s competitor, Samsung won’t exhibit brand new smartphones at the Mobile World Congress (MWC) 2013 in Barcelona (25-28 Feb). Even LG’s new Optimus model called ‘G Pro’ is scheduled to be unveiled early next week via the firm’s own event ahead of MWC. The Optimus G Pro will embed very powerful tech spec (5.5″ full HD display, quad-core Snapdragon S4 Pro, 2GB DRAM, 13-mega camera, etc). Of course, Samsung’s Galaxy S4 will also debut via Samsung’s own event either in late- March or April, the analysts believe. However, they expect more high spec-based new smartphones/tablets from non-Korean OEMs, particularly from China, at MWC.
