On the eve of iPhone 12 mini and Pro Max preorders, all signs point to stronger-than-expected demand for the whole iPhone 12 family.
From a note to clients by analyst Katy Huberty that landed on my desktop early Friday:
Seven of Apple’s semis suppliers, including Qualcomm, Cirrus Logic, STMicro, Skyworks, NXPI, Qorvo, and Texas Instruments reported earnings over the last 2 weeks, and they all posted C3Q revenue that surprised to the upside, beating consensus estimates by 7% on average (Exhibit 1, below).
Additionally, suppliers issued C4Q revenue guidance that was above consensus by 13% on average, which implies an average of 12% Q/Q revenue growth vs. trailing 3 year seasonality of flat growth Q/Q (Exhibit 2)
The delayed launch of iPhone 12 models helps explain the better December quarter seasonality, but commentary from these suppliers also suggests that performance is exceeding prior expectations. For example, Qualcomm, a supplier of 5G modems and RF content for the iPhone, said it believes 2020 5G handset units will now be toward the high end of their 175- 275M range and guided to C4Q revenue growth 16 points above consensus and 30 points above seasonality. Similarly, Cirrus Logic, a supplier of components for audio, voice, and haptic feedback applications in the iPhone, cited that “stronger- than-anticipated orders for components shipping into smartphones” led to C3Q revenue “significantly above” internal expectations and 12% above consensus estimates.
These results and commentary would align with recent December quarter build increases for the iPhone 12 Pro and Pro Max, which came on the back of stronger than expected early consumer demand for the iPhone 12 Pro…
What is perhaps just as important of a takeaway from iPhone supplier results is that the upside to C3Q revenue confirms stronger than expected iPhone demand heading into the iPhone 12 cycle.
Cue Exhibits 1 and 2:
Maintains Overweight rating and $136 price target.
My take: Wow.