New iPhones to benefit Korean partners
Philip Schiller, senior vice president of worldwide marketing at Apple, explains camera features of the company’s latest smartphones ― iPhone 6S and iPhone 6S Plus ― at the Bill Graham Civic Auditorium in San Francisco, California in the United States, on Sept. 9. / AP-Yonhap
Latest Apple devices not serious threat to Galaxy series
By Kim Yoo-chul, Lee Min-hyung
With the iPhone 6S, Apple has released more innovations that it added with last year’s iPhone models. Apple has performed the ultimate conjuring trick, though its new models look almost identical to the old ones.
Researchers and stock market analysts said Thursday that the new iPhones may not become a “serious threat” to its Korean rival Samsung Electronics as the devices probably will not sap demand for Samsung’s Galaxy smartphones in the near future.
Samsung Electronics said it will move on selling more of its latest S6 Edge Plus and Note fonblet in its target markets, including China, ahead of the arrival of new Apple phones.
Samsung is on track to initiate an advertising campaign to highlight key specifications of its devices, making Apple management feel uneasy.
“The new iPhones will not become a ‘game changer’ in the high-end smartphone competition, as they do not contain outstanding features. There doesn’t appear to be any specific features in the new iPhones,” said Eric Yoo, an analyst at Dongbu Securities in Seoul.
Yoo stressed previous iPhones got huge attention as they came with both wider and taller screens. However, the new models don’t have any “eye-catching” features.
“Apple tried to differentiate itself from rivals with improved and new features, but these were already expected. Local smartphone makers will be less affected by the new Apple phones,” said Kim Ji-san, an analyst at Kiwoom Securities, in a report after the Apple event.
They said the key mission for Samsung to better compete with the new Apple iPhones is to maintain flexibility in its pricing strategy as Samsung will work to prevent further decline in its smartphone business that the company lost to cheap Chinese companies as well as to Apple.
Samsung recently cut off the new Galaxy S6 and S6 Edge phones after demand was not as strong as it had anticipated. Its global smartphone share fell by 3 percent in the second quarter.
“Samsung’s sales sat at around 206 trillion won in 2014, but are expected to fall to around 200 trillion won this year as Apple releases another iPhone and updated tablets which continue to be strong performers globally, eroding Samsung's share of the market," said an official.
Positive factor on Korean partners
Apple’s new “i-something” devices will benefit its part-sourcing partners in Korea as market research firms said Apple will ship more iPhones than it has ever done before.
IHS, a leading research firm based in the United States, said in an e-mailed statement to The Korea Times that it forecasts Apple will ship 236 million iPhones this year, up 23 percent year-on-year.
“The magic of the iPhone business will continue to drive Apple and make it possible to establish the new product ranges Apple needs to be secure in the long-term,” it said.
As Apple doesn’t manufacture its hardware devices, it sources key components from companies in Korea, Taiwan, Japan and China.
Samsung Electronics is Apple’s partner in processors and memory chips, while SK hynix and LG Innotek also sell memory chips and camera modules to Apple. LG Display is the main display supplier for Apple, followed by Samsung Display.
“In finished sets, Samsung will compete with Apple. But Samsung’s chip and memory business will benefit from Apple as demand for more Apple smartphones means more sales for processors, memory chips and displays,” said a Samsung official.
MorganStanley, a major U.S. bank, expects Apple to ship between 70 million and 80 million units in the fourth quarter of this year.
SK hynix was named as a “top pick” by analysts thanks to the launch of new Apple devices, as Apple increased the amount of iPhones that have expanded storage capacity.
Apple’s decision to use a 12-megapixel camera module will also benefit LG Innotek. “The average selling price (ASP) of Innotek’s camera module will rise. This is good for the profitability of LG Innotek,” said Hana-Daewoo analyst Kim Rok-ho.
LG Display is at full capacity at its factories in the provincial cities of Paju and Gumi of which the company manufacturer produces displays customized with Apple devices.
“The iPhone has been the engine of Apple's financial and ecosystem strength in recent years. Apple needs the iPhone to continue to succeed because its newer products are not yet delivering remotely comparable financial returns,” said an IHS senior analyst Ian Fogg.