(By Mani) Apple, Inc. (NASDAQ:
AAPL) started selling its iPhone 5 today in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the UK.
The iPhone 5 is not only important for Apple, but also for the entire semiconductor industry as Apple's flagship device is expected to be a key driver of semiconductor revenues and accounts for at least 4 percent of total semiconductor sales.
"We estimate that Apple's iPhone 5 could account for 4.4 percent of total semiconductor revenues in 2013, assuming ~$81 in semiconductor content on 172mil units," RBC Capital Markets analyst Amit Daryanani wrote in a note to clients. This equates to $13.9 billion in annual semiconductor sales into the iPhone 5.
Let's take a look how Apple's iPhone 5 impacts the semiconductor industry:
The above table shows that Apple's iPhone has components from various semiconductor firms including Broadcom Corp. (NASDAQ:BRCM), Texas Instruments, Inc. (NASDAQ:TXN), and Qualcomm, Inc. (NASDAQ:QCOM)
"Our checks suggest that the average memory density per iPhone4/4s sold is between 20-22GB, which is currently below the middle-tier density of the current iPhone sold at 32GB (offered at 16/32/64GB)," the analyst added.
The analyst estimates that Apple is able to procure NAND flash for 42 cents per GB, while reselling for $6.25 per GB, implying a favorable 93 percent gross margin on NAND.
That said, the issue for Apple is how to add embedded features (e.g., Siri) to drive up NAND loadings and thus drive consumers towards a higher blended density from the current 20-22GB.
"We believe that increasing sell-through for high-density devices at Apple would also influence the smartphone industry to accelerate the move towards higher densities, given Apple's unequivocal halo effect," the analyst said.
In addition, it would be interesting to see if Apple chooses to diversify semiconductor components beyond NAND flash loadings across different tiers. In other words, it would be noteworthy for semiconductors should Apple decide to up-sell components in the iPhone 5 in a similar fashion to how the company upsells LTE baseband (optional) across the iPad product line.
The aforementioned areas are the most important for semiconductors investors to take into account. In general, new product launches out of Apple are becoming increasingly important to monitor as analysts expect Cupertino, California-based company consumes about 10 percent of worldwide semiconductor content in 2012, which is expected to grow in 2013.
Moreover, more sales of iPhone 5, or even the iPhone 4S itself, could drive additional sales for the semiconductor firms. If the recent comments are any indication, then iPhone 5 would bring record sales for Apple and its related firms.
Apple's iPhone 5, the sixth version of the popular smartphone, received more than 2 million preorders within 24 hours of its launch on Sept.12, shattering the record previously held by the iPhone 4S.
Wireless carrier AT&T (NYSE:T) also set a sales record with iPhone 5, making it the fastest-selling iPhone the company has ever offered. The carrier said customers ordered more iPhones from AT&T than any previous model both on its first day of preorders and over the weekend.
Apple's supply chain sales would only get brighter as and when the iPhone 5 is rolled out to other parts of Europe and Asian countries. iPhone 5 will roll out worldwide to 22 more countries on Sept. 28, including Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, Italy, Liechtenstein, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.