The arrival of the iPhone 5 will spur a rebound in Apple’s smartphone shipments in the third and fourth quarters following a decline in the second quarter, said research firm IHS iSuppli.
Apple in the second quarter suffered a 26-percent drop in shipments to 26 million units, down from 35 million in the first quarter.
“Apple’s smartphone shipments typically are weak during the quarter preceding the launch of a new iPhone model,” said Wayne Lam, senior analyst, wireless communications, for IHS.
“Buyers historically have delayed their purchases until the newest model is available. Then they rush out to get the latest and greatest version once it’s being sold, leading to a spike in demand. IHS predicts the same pattern will occur with the iPhone 5.”
Apple’s decline contributed to a 1 percent contraction in the overall global smartphone market in the second quarter to 135 million units, down from 137 million in the first quarter.
The arrival of the iPhone 5 will help the global smartphone market return to growth with projected shipments of 346.5 million in the second half of 2012, up from 272.3 million during the first six months of the year.
iPhone 5 display gets both bigger and thinner
With the iPhone 5, Apple is expected to move to a larger display size, at about 4.0 inches diagonally, as opposed to 3.5 inches for the previous models, including the iPhone 4S. The pixel format will likely increase to 1,136 by 640 pixels, up from 960 by 640 for the iPhone 4S, maintaining 326 pixels per inch resolution.
“The iPhone 5 likely will employ in-cell touch technology using low-temperature polysilicon (LTPS) liquid crystal display (LCD),” said Vinita Jakhanwal, director for small and medium displays at IHS.
“In-cell touch technology places the touch sensors inside the LCD panel, as opposed to using a separate touch layer altogether attached on top of the LCD panel, an approach previously used by Apple. In-cell touch can help reduce the thickness of the display, which could make the iPhone 5 thinner than previous models, or clear out space to add other features like a larger battery that can help extend operating time.”
The likely display suppliers for Apple’s iPhone 5 are LG Display Co. Ltd., Sharp Corp. and Japan Display Inc., which all have in-cell touch technology capability. However, manufacturing yield rates associated with the new in-cell touch technology are likely to be lower than that for conventional LCD, which may have an impact on suppliers’ capability to meet Apple’s orders.
“A larger iPhone screen will be even more suited to video playback than older models if Apple adopts a widescreen 16 by 9 aspect ratio,” said Ian Fogg, senior principal analyst for mobile at IHS.
“Apple’s new iPhone will again transform the market for mobile content. This time Apple will revive the market for on-demand mobile TV and video.”
Apple gets on the map
With the introduction of iOS 6 for both new and existing iPhone models, Apple is replacing the current Google-based navigation system it hosts on the phone with its own new location and navigation software, called Maps.
With support for turn-by-turn spoken directions, a vector-based engine and a tilt-and-rotate interface, Maps improves Apple’s offering for drivers. But Apple will need wide support from third party App developers to deliver on its ambitious goals for its new location platform, Fogg noted.
Is Apple getting closer to near-field communication?
Conflicting reports have surfaced on whether the iPhone 5 will include a near-field communication (NFC) chip for electronic mobile payments. While Apple in the past has eschewed the technology, makers of smartphones based on Google’s Android operating system have enthusiastically embraced it, shipping 106 million NFC-enabled cellphones in 2011 alone.
“iOS 6 will include support for Apple’s new Passbook app, which will allow users to employ their iPhone 5 to redeem coupons, movie tickets, boarding passes and loyalty cards, and to conduct other financial transactions,” said Jack Kent, senior analyst for mobile at IHS.
“With its capability to tie purchases together, Passbook will be an effective tool for managing mobile transactions, mobile money services and mobile commerce. If Apple combines Passbook with its new location platform, the company will open both a new revenue stream and a new competitive front with Google.”
Apple may choose to partner Passbook with new hardware support in the iPhone 5, such as NFC.
“If the iPhone 5 does include NFC, Apple will help the global market for NFC-enabled cellphones expand shipments by 118 percent to reach 233 million units in 2012,” said Jagdish Rebello, PhD, director for consumer and communications at IHS.
This compares to 94 percent growth in 2011. Shipments will rise another 81 percent in 2013 to 420 million units. If the iPhone 5 does not include NFC, the forecast for 2012 and 2013 will be significantly reduced, Rebello noted.
Better LTE than never
Because the new iPad that debuted earlier in 2012 offered 4G LTE technology (Long Term Evolution) IHS expects the new IPhone to also offer LTE for the first time on an iPhone. This will deliver a major boost to global LTE subscriptions—depending on which frequency bands and service providers it supports.
“Apple’s new iPad currently supports LTE for U.S. carriers Verizon and AT&T,” Fogg said. “However, the tablet does not support LTE in other regions, including Europe. If the iPhone 5 offers global LTE frequencies then this will expand LTE subscriber growth and boost the fortunes of carriers with LTE networks to the detriment of those that only offer 3G services.”
In part because of the iPhone business, Apple is the world’s leading original equipment manufacturer (OEM) in terms of semiconductor purchasing. The company also is increasing its semiconductor buying at a faster rate than other top OEMs, solidifying its hegemony over the chip market.
Apple this year is expected to buy nearly $28 billion worth of semiconductors, up 15 percent from $24 billion in 2011, according to an IHS iSuppli OEM Semiconductor Spend Analysis report.
Because of its major influence over the semiconductor supply chain, Apple’s iPhone 5 could help spur a resurrection of demand for NAND flash memory.
“Conditions in the NAND flash industry have been volatile this year, with several applications not generating as much demand as expected,” said Michael Yang, senior principal analyst for memory and storage at IHS.
“Apple could pull the NAND market out of its funk with strong sales of the iPhone 5.”