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Ming-Chi Kuo's latest Research Notes Focuses on Apple's new Tetraprism Telephoto Module for iPhone 15/16 Pro Max

10.0z22 cover (Ming-Chi Kuo)

Ming-Chi Kuo's latest research notes published today states that Largan, Crystal-Optech, and Lante Optics are expected to maintain strong shipment momentum until the end of the year (vs. the typical peak shipments for the Apple supply chain in October) due to Apple urgently raising the validation requirements for the iPhone 15 Pro Max telephoto lens before mass production and the better-than-expected demand after its release.

Crystal-Optech (first supplier) and Lante Optics (second supplier) benefit from the substantial growth in prism orders from Largan. As a result, both are expected to operate at full capacity until the end of the year and expand their production capacity by at least 50% in 2024.

LGIT’s (LG Innotek's) current module yield issues may negatively impact near-term profits, but due to technology improvements, the company may become the sole or primary supplier for the iPhone 16 Pro’s tetraprism telephoto module next year.

This shift could disadvantage Genius (lens) and Cowell (module) in obtaining tetraprism telephoto orders for next year’s iPhone 16 Pro series. The key reason lies in the module’s higher lens validation requirements and higher-than-expected assembly difficulties. Close attention should be paid to the validation results of these two suppliers before April next year. 

The iPhone 15 Pro Max demand exceeds expectations, with its major selling point being the telephoto camera equipped with tetraprism technology.

Apple urgently raised lens specifications to improve module yield, hoping that more precise lens assembly (1G3P lens + prism) could compensate for module assembly tolerances.

Due to Apple urgently raising lens specifications and demanding expanded production, the iPhone 15 Pro Max’s telephoto lens unit price increased by about 30% to US$6–6.5.

iPhone 16 Pro Max and iPhone 16 Pro will be equipped with a tetraprism telephoto camera, likely maintaining the current high specifications to ensure camera performance and production yields. I predict the shipment of iPhones equipped with a tetraprism telephoto camera will grow by about 110% YoY in 2024, reaching 70–80 million units.

Largan is the exclusive supplier of the telephoto lenses of the iPhone 14 & 15 Pro Max.

The iPhone 15 Pro Max is the most crucial driver for Apple’s 4Q23 revenue and profit, so Apple agreed to a significant 30% price increase for the telephoto lens in exchange for and to ensure Largan’s support.

Crystal-Optech and Lante Optics will operate at full capacity until the end of the year and will significantly expand production in 2024

Before Apple raised the iPhone 15 Pro Max telephoto lens specifications, Crystal-Optech was almost the exclusive supplier, with an average prism capacity utilization rate of about 70% per month for 2H23. After the specification raises, due to Largan’s significant demand for prisms, even full capacity at Crystal-Optech couldn’t meet order demands, leading to a notable increase in Lante Optics’s orders.

Crystal-Optech is the primary prism supplier, with a supply share of about 70-80%.

To address Apple’s robust prism demand in 2024, Crystal-Optech and Lante Optics will expand their production capacities by at least 50% in 2024. The supply share remains at about 70-80% for Crystal-Optech and 20–30% for Lante Optics.

With high order visibility, Largan, Crystal-Optech, and Lante Optics remain the most significant beneficiaries as Apple aggressively promotes tetraprism technology in 2024.

10.X - Research notes & Rumors from Ming-Chi Kuo

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