This article comes from the WeChat public account "Tianfeng International", and the author is Guo Mingchi.
prediction update: new model 2H19 iPhone antenna soft board supply chain.
The companies mentioned in this report: Pengding Holdings (002938.SZ), Dongshan Precision (002384.SZ), Taijun (6269.TW), Zhending (4958.TW), Jialianyi (6153.TW), Apple (AAPL.US), Murata (6981.JP)
New 2H19 iPhone antenna soft board material was greatly improved; new entrants Pengding Holdings/Zhending, Dongshan Precision and Taijun are the main winners; Jialianyi, who lost iPhone orders, is the main loser; Murata is viewed neutrally. Although LCP (Liquid crystal polymer) has the advantages of high-frequency wireless transmission in theory, due to production problems, the LCP antenna soft board in some cases limits the wireless performance of iPhone XS Max/XS/XR. Because MPI (Modified PI)'s wireless performance in the 4G/LTE frequency band is not inferior to LCP and has production and cost advantages, we expect that most of the new 2H19 iPhone antenna soft boards will abandon LCP materials and use MPI instead. We believe that Pengding Holdings/Zhending, Dongshan Precision and Taijun, Jialianyi, who lost iPhone orders, is the main loser. Although Murata suffers from the material changes, it is still the exclusive supplier of LCP and the increase in yields helps make profits, so it is viewed neutrally.
Assuming that the shipment of the new 2H19 iPhone remains unchanged year-on-year. Benefiting from the functional upgrade, the total value of the new 2H19 iPhone antenna soft board has increased by 10–20% YoY; the upper antenna (UAT: Upper antenna) ASP is higher than the lower antenna (LAT: Low antenna). Although the MPI cost of is lower than that of LCP, it is beneficial to increase unit price because the UAT and LAT of the new 2H19 iPhone are integrated with UWB (Ultra-wideband) and Docking (Docking) functions respectively. Therefore, we estimate that the total value of the new 2H19 iPhone antenna soft board will grow by about 10–20% YoY. In addition, because the design of UAT's MPI antenna soft board is relatively complex and includes LCP with higher ASP, UAT ASP is higher than LAT. After the expected production problems of
are improved, the future 5G antenna soft board materials will still be mainly LCP, and Pengding Holdings/Zhending, Dongshan Precision and Taijun are expected to become the new 2H20 iPhone LCP antenna soft board suppliers. We believe that in the production improvement and more suppliers, the new 2H20 iPhone will adopt more LCP antenna soft boards to support 5G, while Pengding Holdings/Zhending, Dongshan Precision and Taijun are expected to become suppliers and beneficiaries of high-unit price LCP antenna soft boards.
Pengding Holdings /Zhending also benefits from the shipment of MPI UAT and LAT soft boards. Pengding Holdings/Zhending accounts for about 50% and 65% of the MPI UAT and LAT soft board orders respectively. In terms of shipment volume, this supplier is the biggest beneficiary and is expected to make a significant contribution to capacity utilization rate and profit in 2H19. We believe that this company also benefits from: (1) the largest proportion of new 2H19 iPhone SLP orders, (2) Huawei soft boards have grown shipments in 2019, and (3) the market share of 5G LCP and MPI antennas with increased ASP in the future.
Dongshan Precision supplies high unit price iPhone antenna soft boards for the first time, which is beneficial to Apple's product ASP. We estimate that Dongshan Precision is the second supplier of MPI LAT soft boards, and is expected to benefit from the first shipment of high-unit price iPhone antenna soft boards. We believe that the company also benefits from: (1) the comprehensive effect in the automotive, communication and other markets after the acquisition of Multek, (2) the demand for 5G infrastructure is expected to restore growth in the dielectric filter business in 2019, and (3) the company has obtained more orders for iPad and Apple Watch soft boards in 2019.
Taijun high unit price MPI UAT supply proportion is higher than market expectations, and it supplies high unit price iPhone antenna soft boards for the first time, which is beneficial to Apple product ASP. We estimate that the proportion of MPI UAT orders in Taijun is 50%, higher than the market estimate of 20–30%. This order is expected to make a significant contribution to capacity utilization and profits in 2H19. We believe that the company also benefits from: (1) starting to ship LCP soft boards for iPads in the late 4Q19, (2) the new 2H20 iPhone LCP antenna soft boards, and (3) next-generation display related products.
expects Jialianyi will not be the new 2H19 iPhone supplier, and the 2H19 camp sports energy may decline. The company faces unfavorable growth momentum challenges in 2019, including: the 2H18 base period is too high, the loss of new 2H19 iPhone soft board orders, and the loss of 2019 iPad and Apple Watch orders to Dongshan Precision.
Investment advice: new entrants Pengding Holdings/Zhending, Dongshan Precision and Taijun are the main winners; Jialianyi, who lost iPhone orders, is the main loser; Murata is neutral.
Risk warning: new product production is deferred, demand is lower than expected due to the US-China trade war, and suppliers' non-iPad business growth is worse than expected.
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