Morgan Stanley: Apple’s iPhone suppliers are firing on all cylinders

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:

apple iphone suppliers cylinders

apple iphone suppliers cylinders

Maintains Overweight rating and $136 price target.

My take: Wow.

22 Comments

  1. Jerry Doyle said:
    My take: Apple @ $150 by Q2 21 financial call April 29, if not before then. 🙂

    2
    November 6, 2020
  2. Bart Yee said:
    Well, today, Nov. 6, 2020 should be historic. Apple takes preorders for its best iPhone 12 Pro Max and its groundbreaking back to the future iPhone 12 mini. Both are destined to be big sellers and keep Apple moving to a big quarter. Plus the HomePod mini also goes on sale.
    And on Tuesday Nov. 10, the One More Thing event for Apple Silicon Macs, another step forward for Apple.

    But just Apple’s luck AGAIN, overshadowed yet another time by external events. I hope someone will notice what Apple is doing!
    🙂 😉

    3
    November 6, 2020
  3. George Ewonus said:
    Trying to order 2 iPhone Pro Maxes this morning at launch time. No luck yet – site is slammed!

    0
    November 6, 2020
  4. Adam Foster said:
    @George Me too – two phones but site says “Almost There…”

    1
    November 6, 2020
  5. Adam Foster said:
    Clicking refresh for 17 minutes, can’t get thru to Apple

    0
    November 6, 2020
  6. Adam Foster said:
    Done – two iPhone 12 Pro Max to be delivered Fri Nov 13th… Yay!

    1
    November 6, 2020
    • George Ewonus said:
      Hi Adam. Likewise – 2 iPhone Pro Max for Fri, Nov 13th!

      0
      November 6, 2020
  7. Fred Stein said:
    Can’t wait till the analysts start to understand this – the demand for the Pro Max.

    Can’t wait to get my hands on one.,

    3
    November 6, 2020
  8. bas flik said:
    look like enormous cycle
    we have never seen such a demand with a iphone launch in our online shop in the netherlands.
    both launches together is 4 times more then last year
    we are selling now for 1,5 hour almost only max and no mini
    most customers prefer the max

    my predictions is that apple can easily sell 300mio iphones but will not be able to produce them
    supply is the issue.

    i have never seen so much demand for iphone since introduction date.

    2
    November 6, 2020
  9. David Emery said:
    My HomePod mini is due “Nov 17-Nov 19”.

    Yesterday I want to T-Mobile to ask if I could “borrow a SIM” to see if their service is better than ATT in the house. They have a free ‘try before you buy’ product (a WiFi hot spot) that I have on order. The store assistant manager and I agreed, though, that they really should support a prepaid ‘soft SIM’ for exactly that kind of use.

    0
    November 6, 2020
  10. bas flik said:
    split is pro max 90% mini 10%

    1
    November 6, 2020
  11. Gregg Thurman said:
    Katy discredits the hell out of yesterday’s Bloomberg shortage article. Like I said when the article came out, every year there are shortage articles, and all prove to be false.

    3
    November 6, 2020
    • George Ewonus said:
      Hi Gregg. I have always viewed the majority of those articles from a wireless signal ratio – very little signal, tons of noise.

      3
      November 6, 2020
  12. Rodney Avilla said:
    4:55 alarm
    4:58 ‘please wait’
    5:00 waiting
    5:01 waiting
    5:02 preorder went thru. Blue Max
    5:03 ordered case
    5:04 back to bed.

    2
    November 6, 2020
  13. bas flik said:
    i am online mobile phone retailer in the netherlands sinds 1998. we are selling carrier plans and phones. so i can use my own data. what i see now is more or less an explosion of demand in iphone 12. unprecedented. market is under estimating what is happening. today with the launch we are seeing almost only 12 pro max orders. 9 to 1 with mini. So asp bonanza.

    but no supply. that worries me.

    1
    November 6, 2020
    • Gregg Thurman said:
      Thanks bas. It’s great to have someone with real data on board.

      Way back in 2008-2010 I used to have a network of Apple Store employees that reported their Apple generated sales quotas (percentage of growth) to me. These reports were excellent guides to revenue estimates. Alas, as Apple revenue shifted to overseas markets, coupled with the turnover of employees, my efforts rapidly lost validity.

      Today I can only get impressions of YoY sales activity from employees that really don’t know.

      0
      November 6, 2020
    • Bart Yee said:
      Welcome bad! We appreciate your data and perspective. I very very much hope your data trend stays that way, it would mean a big move for Europe Apple segment revenue. I think China will echo this as well.

      Where I see the mini doing “better”, maybe 25%, is Americas where the demand for smaller phones still has its adherents. Japan and Rest of Asia like Singapore may also have a decent share (20%).

      If Apple sells 80-82M units this quarter and mini is conservatively 10-15% (8.0-12M), I think Apple would be plenty happy with that and 16-25M/annum for this model.

      Remember, this price range now has its own Apple iPhone competition in the discounted non-5G iPhone 11 and XR where many will find compelling value IF they don’t want to pay for the latest spec and 5G.

      But for Apple, it would all be good. If the . A nice mix would be 12 Pro 30+%, (24M), 12 20+% (16M), Pro Max 20%(14-16M), mini 10-15% (12M), and the XR, 11, SE all make up another 10-12% (8-10M) of this quarter’s sales. ASP would then be around $850 conservatively, leading to $68-69.5B iPhone revenue compared to $56B last year and 21+% YOY!. Now maybe that’s optimistic due to supply constraints but even if only 78M, that’s still $66.3B, up 18%, easily propelling to $100B+ quarter. Go Apple!

      1
      November 6, 2020
  14. Gregg Thurman said:
    I agree with you revenue estimate (I’m currently at $103.5B) WS consuls revenue estimate is $101 B

    As we get more clarity on sales and mix of ALL products I think WS’s estimate will increase

    1
    November 6, 2020
  15. bas flik said:
    our sales spilt of the day 6/11/2020:
    iPhone 11 128GB 3,00%
    iPhone 11 256GB 0,25%
    iPhone 11 64GB 5,25%
    iPhone 11 Pro 512GB 0,25%
    iPhone 11 Pro 64GB 1,25%
    iPhone 11 Pro Max 64GB 4,50%
    iPhone 12 128GB 5,75%
    iPhone 12 256GB 0,50%
    iPhone 12 64GB 3,50%
    iPhone 12 Mini 128GB 3,25%
    iPhone 12 Mini 256GB 2,50%
    iPhone 12 Mini 64GB 4,75%
    iPhone 12 Pro 128GB 10,25%
    iPhone 12 Pro 256GB 0,75%
    iPhone 12 Pro 512GB 1,00%
    iPhone 12 Pro Max 128GB 36,25%
    iPhone 12 Pro Max 256GB 11,75%
    iPhone 12 Pro Max 512GB 2,00%
    iPhone 8 256GB 0,25%
    iPhone 8 64GB 0,50%
    iPhone SE 64GB 0,50%
    iPhone SE 2020 128GB 0,25%
    iPhone SE 2020 64GB 0,25%
    iPhone XR 128GB 0,75%
    iPhone XS 256GB 0,25%
    iPhone XS 64GB 0,25%
    iPhone XS Max 64GB 0,25%

    1
    November 6, 2020
  16. bas flik said:
    iphone 12 sale on introduction day 6/11/2020:
    iPhone 12 128GB 6,99%
    iPhone 12 256GB 0,61%
    iPhone 12 64GB 4,26%
    iPhone 12 Mini 128GB 3,95%
    iPhone 12 Mini 256GB 3,04%
    iPhone 12 Mini 64GB 5,78%
    iPhone 12 Pro 128GB 12,46%
    iPhone 12 Pro 256GB 0,91%
    iPhone 12 Pro 512GB 1,22%
    iPhone 12 Pro Max 128GB 44,07%
    iPhone 12 Pro Max 256GB 14,29%
    iPhone 12 Pro Max 512GB 2,43%

    1
    November 6, 2020

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