|Himax Can Shine as Android Copies Apple’s Augmented Reality, Says Northland|
Apple's inclusion of 3-D sensing in the iPhone X is good news for Himax, which could get business supplying 3-D sensing components to Samsung, Xiaomi and Huawei as they all look to equip their smartphones to match Apple, according to Northland's Tom Sepenzis. Qualcomm could also be a beneficiary.
By Tiernan Ray Sept. 13, 2017 3:04 p.m. ET
The "TrueDepth" camera on the front of Apple's iPhone X that makes possible augmented reality, via a collection of novel sensors.
As mentioned earlier, the Street today is assessing the lift to component suppliers of Apple’s ( AAPL) new iPhones and Apple Watch and Apple TV, unveiled yesterday during Apple’s media event in California.
Among indirect beneficiaries could be Himax ( HIMX), whose role in so-called 3-D sensing may be helped by the fact that Apple ( AAPL) made 3-D sensing, and "augmented reality,” the key feature on the iPhone X.
You’ll recall Himax was a supplier to Alphabet's ( GOOGL) Google for its ill-fated “Google Glass” headset. But things could be brighter this time around with a bunch of Android-based smartphone A.R. applications.
Northland Capital Markets’s Tom Sepenzis today reiterates an Outperform rating on shares of Himax, and raises his price target to $15 from $12, after concluding that "it appears that multiple Android handset manufacturers are looking to follow Apple’s lead next year."
He thinks smartphone makers including Samsung Electronics ( 005930KS) and Xiaomi and Huawei will now turn to Himax, and to partner Qualcomm ( QCOM), for 3-D sensing:
Heading into the Apple event, we had learned that Huawei and Xiaomi are joining Samsung in the development of 3D sensing for their respective high-end offerings next year. Huawei seems to be looking to develop its own solution, but we believe they have also engaged QCOM/ HIMX so that they can hit the market in the Q1/Q2 time-frame, which they will not be able to accomplish on their own. Xiamoi, from what we can tell, is planning on using the HIMX/QCOM solution as is Samsung. Despite the less than compelling 3D introduction delivered by Apple yesterday, we expect that these handset suppliers will continue to develop and eventually incorporate 3D sensing with the expectation that additional applications will emerge over time.
Himax may soon be faced with a production challenge:
We believe Himax has begun its phase 2 build- out of additional capacity earlier than expected. If Samsung, Huawei and Xiaomi all launch high-end handsets next year, Himax will be pressed to deliver the number of units these three suppliers can command. Samsung could deliver 70-100 million units between the Galaxy S9 and the Note 9 and the others could easily add another 50 million units next year.