Strong demand for 5G iPhone 12 series means strong business for certain suppliers

Strong demand for 5G iPhone 12 series means strong business for certain suppliers
According to Digitimes, shipments for components used in the Apple iPhone 12 Pro line are continuing to grow. Orders for voice coil motors (VCM) for the iPhone 12 Pro and iPhone 12 Pro Max are being filled mostly by two Japanese firms, Alps and Mitsumi. Sources told Digitimes that overall VCM shipments for the iPhone 12 series will be larger than the number of such components delivered for the iPhone 11 units. Contract manufacturers in Taiwan are said to be busy at work building VCM units for the aforementioned Japanese suppliers.

Rising demand for 5G iPhone 12 series has supply chain pumped

VCMs are simple motors made up of two parts: the magnetic housing and the coil. Each iPhone 12 series handset requires 4 to 6 VCM units for the camera module and with stronger than expected demand for both iPhone 12 Pro models, VCM suppliers have been busy. As a result, some other members of Apple's supply chain are sniffing around hoping to become full-fledged VCM suppliers for the 2021 iPhone models. For example, lens supplier Largan Precision, already a member of the Apple supply chain, has a division called Largan Digital that is believed to be developing its own line of voice coil motors.

The strength in iPhone 12 Pro and iPhone 12 Pro Max sales have also helped other suppliers such as Taiwan's Win Semiconductors and Visual Photonics Epitaxy. Both of those firms have been picking up revenue as they attempt to play a major part in the production of LiDAR depth sensors for the iPhone 12 Pro units. The Time-of-Flight component measures the time it takes for an infrared light to bounce off of a subject and return to the phone. This helps produce higher quality depth measurements used to create portraits with enhanced bokeh blurs and AR images. The LiDAR depth sensor debuted on the iPad Pro (2020) earlier this year.

According to industry sources, Apple's overall supply chain is taking advantage of tight supplies of the new models by increasing their output of parts. In some countries and markets, lead times for the iPhone 12 series run from two-to-three weeks and as long as three-to-four weeks in some regions. In order to produce more parts, companies that assemble the iPhone such as Foxconn and Pegatron are adding more overtime shifts and are looking for more workers. In addition, the company that supplies Apple with the iPhone camera modules, Genius Electronic Optical (GEO), is also looking to add more employees and run more overtime shifts during November and December. The three are pushing their component suppliers to ship more product.

With sales of the iPhone 12 series so strong, companies in Taiwan that produce cooling solutions for smartphones see demand for vapor chambers and heat pipes bouncing back in 2021. Those suppliers include Chaun-Choung Technology, Auras Technology, Taisol Electronics and Asia Vital Components. Still, some of these vendors remain negatively impacted by the coronavirus. For example, Auras saw the percentage of its third quarter revenue attributed to smartphone cooling solutions decline to 5% from the 24% it reported during Q1.

These cooling solution suppliers expect stronger sales of 5G phones next year to give them a boost. Handsets that support 5G run hotter which explains why these suppliers are over the moon with the industries' projection that sales of 5G phones will rise to 450 million-500 million units next year, up from the 220 million estimated for 2020. At that pace, demand for smartphone cooling solutions will be strong next year.

Digitimes says that Apple, Samsung and other Chinese phone manufacturers are gearing up to take market share away from Huawei which was the second largest smartphone manufacturer in the world during the third quarter. The U.S. ban that prevents Huawei from accessing its U.S. supply chain and receiving cutting-edge chips could hasten the end of the company's life as a major smartphone manufacturer. Just yesterday, Huawei sold its Honor brand to China Telecom, some state-owned firms, and other buyers.
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