Krish Sankar, Cowen Senior Analyst, talks about what to expect ahead of the September 14th event.
Video Transcript
AKIKO FUJITA: Well, let's turn our attention to shares of Apple. We are seeing it pull back in this session after a big run up in the stock. It's now down about 1.2%. Investors now looking ahead to that big September 14 event, dubbed California Streaming, where the tech giant is expected to unveil their new iPhones.
Let's bring in Krish Sankar, Cowen Senior Analyst. And Krish, it's good to talk to you today. You know, we have seen a huge run up in the stock in the lead-up to this event, obviously pulling back just a bit. But what do you see as the big driver, and how big of a catalyst is that event next week likely to be?
KRISH SANKAR: Yeah, hi. Thanks for having me. I would say definitely the event is partly a catalyst for some of the [INAUDIBLE] stock. Historically, the stock has done well into the iPhone's release. But at the same time, I would say most investors don't have very high expectations for the new iPhone, because most people do believe that the iPhone that's going to be released next week is going to be an iteration of the iPhone 12.
You might call it iPhone 13. Some people think that's an unlucky number. It might be [INAUDIBLE]. But it's going to be just an incremental to what they released last year.
The biggest things we have heard is maybe change in the camera, a little more time [INAUDIBLE]. Last year, the use of 5 nanometer chip. This year, it might be more of a 4 nanometer chip, which is just markedly slightly better, but not a whole lot compared to last year. So I think the expectations are that this is not going to be something massively different. It's just going to be incremental compared to last year's iPhone.
- Yeah, iPhone 13. You know, 13. Hotels and all the other buildings that don't have the 13th floor, we all know who's on the 14th floor. We know what we are here.
When we talk about the rally that Akiko has been pointing to on Apple here, I mean, it always kind of happens when you do have those big launch events and a lot of people get excited about it. But you're talking about the chips behind all this, and that's obviously been a big push and a big issue for a lot of tech companies here. I mean, how much does that maybe tie into topping out or limiting some of the upside here for Apple?
KRISH SANKAR: Yeah. I mean, I think the last earnings call, Apple [INAUDIBLE] articulated. If you tried to do the math, I think the first half of the calendar year '21, the impact for Apple was more felt on the iPad and the iMac. I think the second half, as we roll into the new iPhone, you're seeing some impact of chip shortages on the iPhone. I think they calculated it as a little over $2 billion or so impacting the September quarter.
But I would say largely, there is some impact. But I think Apple, given its supply chain resilience, is probably slightly better off than most of the others, especially in the iPhone category. So there could be some constraints because of the component shortages, but I would say largely speaking, I think no one is immune to it. But Apple is slightly in a better position.
But does that impact the unit shipments for this year? So far, it doesn't seem like. I think we'll be expecting 90 to 95 million shipments of the new iPhone in the second half of this year, which would be basically late Q3 and calendar Q4. And I don't think that view has changed in the last two months in either direction. So hopefully that means things are at least stable for now.
AKIKO FUJITA: No delays necessarily with the iPhone. But we have seen those headlines coming out of the Nikkei, as well as Bloomberg, suggesting there are delays for the Apple Watch, which has seen some pretty big growth here. It's been a big device for Apple in connecting all the services together. How big of a concern is that for you, and what do you see in terms of the hiccups along the way?
KRISH SANKAR: Yeah. Fair, Akiko. That's a good question. I would say two things.
Number 1, if you look at it, clearly, iPhone is the biggest product for Apple. And there, they seem to be doing pretty well. So that's a positive.
And Apple Watch seems to be impacted a little bit from the component shortages. We also heard a little bit of the iPad and the iMac side, et cetera. And I would say those definitely do add up.
But in the grand scheme of things, Apple Watch is like a $10 to $15 billion business, or somewhere in that range, while the iPhone is probably closing in on $200 billion or so. So I think on that basis, I think the iPhone definitely moved the needle more than the Apple Watch. But all these other component prices that we are seeing outside the iPhone, like the Watch and the iPad and iMac, is definitely something to be concerned about. It's definitely a slight negative, but it doesn't necessarily move the needle, as in it's not a thesis-changing component [INAUDIBLE].
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Apple stock falls as investors look ahead to Apple iPhone 13 event - Yahoo Finance
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