Apple iPhone 6 News Good For Component Suppliers

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Apple iPhone 6 News Good For Component Suppliers
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Apple Inc. (NASDAQ:AAPL) will certainly roll outthe iPhone 6 this year, but the exact date has not yet been revealed.  Looking at the previous release dates, however, it is clear that the smartphone will arrive in the vicinity of September. The last four iPhone models were released between September and mid-October, so it is expected that the latest flagship will be launched in the same time frame, says a report from Storm Research Ltd published June 10th.

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Apple suppliers see increased demand

It is expected that the Apple Inc. (NASDAQ:AAPL) iPhone 6 will have a higher resolution screen powered by an A8 chip, iOS8 firmware in 4.7″ & 5.5″ versions of the phone.

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Shares are already reacting to the news that Apple Inc. (NASDAQ:AAPL)’s supply chain is in full throttle. Companies that offer accessories to the iPhone are also seeing a rise in sales and share price. One example is Minebea, a firm that makes high-end LED backlighting, and sales are expected to reach Y80 billion in fiscal 2014. The stock has surged 212% over the last year.

FPC makers like Nokia, Fujikura and Sumitomo Denko are also seeing high demand prior to the iPhone launch. Japanese FPC makers argue that it is their advanced technological know-how and proven track record with design complexity that is earning them contracts from Apple Inc. (NASDAQ:AAPL).

Arisawa, a forgotten supplier

Demand for the companies making Copper Clad Laminate (CCL), a vital component of FPC has also increased. CCL utilization rates at Arisawa and its Taiwanese subsidiary Thinflex have increased to 90-100%. Furthermore, Arisawa is the only company that can produce both types of CCL, which is helping it to gain more marketshare.  For the fiscal year 2013, FPC sales within the Arisawa’s electronic raw material division were Y15.5 billion. Of these sales, around 60% were to Apple Inc. (NASDAQ:AAPL), representing 30% of total sales. In 2014, the company is estimating FPC sales growth of more than 12% year over year. The supplier also believes that the percentage of sales to Apple will be higher this year.

When compared to Minebea, shares of Arisawa have not performed as well despite their “burgeoning Apple related order book.” Although some might name it as Apple Inc. (NASDAQ:AAPL)’s forgotten supplier, analysts at Storm Research remain positive, and “believe there is significant potential upside from current levels.”

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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