Apple (AAPL) - Get Report reportedly is going all-in on 5G, with all of its next-generation iPhones to be released next year being 5G-capable, including its first revamp of its budget handset in two years.
Nikkei Asia reported that Apple will not introduce any new 4G models next year, and will instead begin selling a version of its cheapest handset - the popular iPhone SE - that is compatible with the next-generation communication standard.
Apple also will not introduce an updated version of the iPhone Mini next year, after the premium smartphone with a smaller screen failed to catch on with consumers, Nikkei Asia said, citing sources familiar with Apple’s plans.
The budget 5G iPhone is set to hit the market as early as the first half of 2022 and will be powered by Apple's own A15 processor - the same chip that will go into this year's premium iPhones, Nikkei Asia added. 5G connectivity will be enabled by Qualcomm's (QCOM) - Get Report X60 modem chip.
The report comes as investors await Apple’s third-quarter earnings, which will be released next Tuesday. Analysts polled by FactSet are expecting earnings of $1.01 a share on revenue of $73.1 billion, both of which Wedbush Securities’ analyst Dan Ives called “conservative.”
Wall Street’s current earnings forecasts for Apple “… look likely conservative given the underlying iPhone strength we saw during the quarter with a particular uptick in demand out of China,” Ives wrote in a research note to clients.
“While the chip shortage was an overhang for Apple during the quarter, we believe the iPhone and services strength in the quarter neutralized any short-term weakness that the Street was anticipating three months ago,” Ives said. He has an outperform rating on the stock and a one-year price target of $185.
Ives and others are anticipating strong demand for the iPhone 13, which is expected to be rolled out this fall - an expectation reinforced by on-the-ground supply chain checks, “… which are currently in the ~90 million/100 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID), representing a ~15% increase year-over-year out of the gate.”
“Taking a step back we believe based on our recent Asia supply chain checks that iPhone 13 demand will be similar/slightly stronger than iPhone 12 out of the gates, which speaks to our thesis that this elongated "supercycle" will continue for Cupertino well into 2022.”
Separately, The Wall Street Journal reported Tuesday that Apple was searching for a Los Angeles production facility as it seeks to expand its Apple+ TV entertainment unit.
Apple shares were down .12% at $145.98. The stock recently touched an intraday all-time record high of $149.45. The stock is up 13% year to date.