March 27, 2014
USA | Technology | Telecom Equipment/Wireless
EQUITY RESEARCH AMERICAS
Telecom Equipment/Wireless
Quarterly Smartphone, Tablet, and PC
Survey
Key Takeaway
Due to build plan cuts, we trim our CQ1 Apple iPhone estimate but think the iPhone 6 launch is still the key driver for the stock. We raise our Qualcomm estimates and price target as we are less pessimistic about smartphone ASP declines due to the ramp of LTE handsets in H2 and into 2015. We also trim our
2014 PC forecast from -4% to -5%.
Survey details. We focus on Apple, Samsung (005930 KS, KRW1.3M, Buy), and smartphone industry trends including top-selling models, customer satisfaction by brand, customer interest by brand, and ASP trends.
Overall optimism for volumes increased again but Apple sell-through not as strong. Last year 48% of survey participants were optimistic about overall volumes in May and 40% in Aug, but our Dec survey saw optimism of 58% and Mar continued to see strength (65%). Jefferies Semiconductor analyst Sundeep Bajikar expects initial Samsung S5 shipments of ~2M units in March and 15-16M in Q2. Only 33% of respondents said Apple was their best-selling smartphone vs. 43% in Dec.
Trim Apple CQ1 iPhone estimates but iPhone 6 still the key. Our checks indicate that CQ1 builds have been cut from 34M to 31M. We trim our shipment estimate from 37.8M to 35.8M (about 5% below St). CQ2 builds remain stable at around 27M and we maintain our CQ2 shipment estimate of 33M. We remain comfortable with our CQ1 iPad shipment estimate of 21.6M (slightly above St) as builds have been slightly raised but are likely pullins from CQ2. Jefferies HK/China TMT analyst Ken Hui notes that in China, the negative impact from the anti-corruption drive on the luxury market has extended to smartphones.
Government-related organizations have been trying to stay away from iPhones in particular.
China Mobile sold 600-800K iPhones altogether in