iPhone 6 To Boost InvenSense, NXP Semiconductors

Upcoming iPhone 6 orders have caused analysts at Pacific Crest Securities to raise their estimates for two major Apple Inc. (NASDAQ:AAPL) suppliers. They said that after their trip to Asia, they are “more confident” in their expectations for the features of this year’s iPhone 6.

Possible iPhone 6 features

In a recent report posted on Barron’s, analysts John Vinh and Kevin Chen said they believe the iPhone 6 will use drivers from Renesas SP. They said this alleviates “concerns of share loss given its discounted take-out valuation.” They expect the iPhone 6 to come in two models: a 4.7-inch model and a 5.5-inch model.

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However, they predict that only the bigger iPhone model will have optical image stabilization (OIS) because they estimate that there’s still a $4 to $5 cost premium of including that technology rather than standard auto focusing. Also they say that restricting OIS will provide further differentiation between the two iPhone 6 models. They said it still isn’t clear whether Apple Inc. (NASDAQ:AAPL) will use a camera module gyro that’s separate or the main gyro that’s in the phone.

iPhone 6 to boost Apple suppliers

The analysts say NXP Semiconductors NV (NASDAQ:NXPI) will be one of the big beneficiaries of Apple Inc. (NASDAQ:AAPL)’s iPhone 6.They raised their price target from $72 to $80 per share. They expect Apple to use NXP’s near field communication (NFC) in the handset, which would create upside to consensus estimates and cause the company’s multiple to expand.

The Pacific Crest analysts reiterated their Outperform rating on InvenSense Inc (NYSE:INVN) and raised their price target from $22 to $26 per share, saying they believe that OIS could be just the beginning of the company’s opportunities at Apple Inc. (NASDAQ:AAPL). They say more wins with Apple could create upside to their estimates. Some possibilities include InvenSense making the main gyro for the iPhone 6 and Apple including OIS on the smaller 4.7-inch iPhone in addition to the bigger 5.5-inch model. They see even more upside if Apple utilizes the company’s technology for the rumored iWatch.

Expectations for the iWatch

Speaking of the iWatch, the Pacific Crest team believes production on it will ramp in the third quarter. However, they note that expectations for the device “vary widely.” They say conversations with component vendors in Apple Inc. (NASDAQ:AAPL)’s supply chain suggest they have already begun ramping capacity for the iWatch.

However, estimates for how many smart watches Apple Inc. (NASDAQ:AAPL) will be able to sell range from “several million units” up to 10 million.