When the next iPhone launches, don’t expect two new choices. That’s the thought from the often accurate KGI Securities analyst Ming-Chi Kuo, who noted over the weekend that Apple is now likely to only debut a new 4.7-inch iPhone 6 handset this fall. The company was expected to launch a larger 5.5-inch iPhone as well, but Kuo says those plans are delayed due to production challenges for the bigger handset.
We think the 5.5-inch model will also have issues with the yield rate of in-cell touch panel and color unevenness of metal casing. Indeed, these problems will likely be even more complicated with a larger size. In addition, from a technical perspective, we don’t expect sapphire cover, used for the first time on the 5.5-inch model, will easily pass the drop test near term. We are conservative about 5.5-inch iPhone launching by end-2014. Even if the product is launched in 2014, it is likely to take place after mid-4Q14, which is later than the September-October of consensus, with shipments being lower than consensus of 15- 20mn units.
The launch of two new phones never really sat well with me anyway. While Apple could change its playbook, it has never launched a pair of new handsets at the same time. Instead, the company follows the tried but true approach of upgrading last year’s model with better components or with a whole new redesign. It’s not impossible that Apple could launch two new iPhones, but it’s not something the company has done before.
It’s also not something the company may even need to do. Simply bumping up the iPhone screen size from 4 to 4.7 inches — along with improvements in the chip, camera sensor and other components — will make many people happy enough. With Samsung recently warning investors about declining profits, Apple may not need to launch a bigger and “bigger-er” phone at the same time to keep iPhone growth moving in the right direction.