Today, Ming-Chi Kuo released his latest report, pointing out that the iPhone camera lenses are unlikely to receive a major hardware update until at least 2022. It is expected that the main lens suppliers for iPhone in the future will be Largan Precision, Genius Electronic Optical (GSEO), and Sunny Optical. Kuo believes that GSEO will be the main loser. Sunny Optical is expected to grow significantly in the next three years due to Apple’s orders.
Ming-Chi Kuo predicts that Largan Precision will increase its capacity utilization rate in the first half of 2021 by lowering the average selling price of high-end iPhone lenses by about 15%-25%. This will directly affect GSEO’s order share, capacity utilization rate, and gross margin. The impact of the price war will begin in January 2021, and GSEO’s revenue growth for that month may only be in the single digits or even decline.
The report points out that GSEO faces price competition from Largan Precision. Unless the structural challenges in the lens industry are significantly improved or GSEO can greatly reduce its dependence on Apple orders, its earnings per share (EPS) may not grow in 2021-2022.
Although Largan is also facing challenges in its industrial structure and price wars due to stagnant lens upgrades, its technological advantages and economies of scale can still offset some of the negative effects of price wars. The long-term trend of lens upgrades continues, and if challenges in lens structure are resolved, Largan Precision will be the first supplier to benefit.
Sunny Optical will start shipping iPhone lenses in 2021. If lens shipments go smoothly in 2021, production capacity will be further expanded by at least 50% in 2022.
Although Kuo predicts that the camera lens hardware will not be significantly improved in 2021 and 2022 iPhone models, this does not mean that the overall camera performance will not improve. Apple is expected to optimize its camera software and algorithms.