Rising Popularity of Foldables and Imminent iPhone New Model Launch
Expecting Benefits Mainly for Large-Cap Stocks
Samsung Electronics unveiled the foldable smartphones 'Galaxy Z Fold3' and 'Galaxy Z Flip3' at 'Galaxy Unpacked 2021'. On the 12th of last month, customers visiting the Samsung Delight Shop in Seocho-gu, Seoul, were seen exploring the new products. Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Minwoo Lee] Expectations are rising for related component stocks as Samsung Electronics' smartphone sales are projected to increase in the third quarter of this year, alongside the confirmed launch of Apple's new iPhone model.
According to the Korea Exchange on the 13th, Samsung Electro-Mechanics' stock price closed at 188,000 KRW on the 10th, up 3.87% from the previous day. This significantly outperformed the KOSPI's 0.36% increase. As of 9:28 AM that day, the price showed a slight decline to 187,000 KRW. LG Innotek showed a similar trend, closing 3.84% higher on the 10th compared to the previous day, surpassing the market return, but showed some hesitation in the morning session. Both stocks are expected to report strong third-quarter earnings, fueling expectations that they will benefit from the anticipated expansion in smartphone sales.
Daishin Securities forecasts Samsung Electronics' smartphone sales in the third quarter to increase by 16.5% quarter-on-quarter to 68.9 million units, citing the foldable smartphone's initial response exceeding expectations. Additionally, Apple's traditionally second-half new product, the iPhone 13, is scheduled for release on the 1st of next month, further boosting sales expectations.
However, differentiation among component stocks based on 'scale' is expected. With the Galaxy Note 21 no longer being released and the benefits of Samsung Electronics' foldable smartphones limited to a few companies, fundamental profitability improvements for small and medium-sized mobile phone component manufacturers are expected to take time.
Therefore, the benefits are expected to concentrate on large-cap stocks for the time being. Kim Rok-ho, a researcher at Hana Financial Investment, emphasized, "Although Samsung Electro-Mechanics' downstream industries are diversifying, the smartphone segment still accounts for over 40% based on its core product, multilayer ceramic capacitors (MLCC). Smartphones did not benefit from the untact trend, and due to semiconductor supply shortages this year, shipments were revised downward from initial expectations. Based on this, sales growth next year is highly likely."
LG Innotek is also expected to continue strong performance. Cha Yumi, a researcher at Mirae Asset Securities, stated, "Despite changing the supply method from integrated modules to individual cameras, strong performance is expected due to the new product launch by the North American client (Apple). The number of products equipped with sensor-shift components is expanding from one to the entire lineup, which is expected to improve profitability."
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