The iPhone X, Liam Neeson & Japanese equity opportunities

Written by Rowan Ewart-White

6 March 2018

I Phone X

The iPhone X was released at the end of last year. Would the hype, the OLED screen, the face recognition & the animojis, justify the 4 figure price?

Answer: whilst the phone is undoubtedly good, it is struggling. Consider the following:

  1. Production of key iPhone X components has stopped. You, the potential customer, have decided not only that the X’s price is too high, but also that the iPhone 8 & iPhone 8 Plus are not good enough iterations to justify the increased cost. The result? iPhone 6 & iPhone 7 demand is red hot.
  2. Apple is planning 3 new iPhones, with component specs currently being redesigned & mass production scheduled to start in May/June.
  3. Improving smartphone specs are dictating more electronic materials per unit. The iPhone X contains 20 Flexible Printed Circuits versus 14 in the iPhone 6. What does that mean? Put simply: more stuff at faster speeds in the drive towards frictionless communication.
  4. The X’s OLED screen is interesting. As the only company currently capable of consistently mastering the welding of fine metal masks to metal frames with the correct tension & precision, Samsung holds a lock on the smartphone OLED screen market.
  5. A Japanese company we are recommending has developed a competing product which facilitates higher OLED screen production capacity at lower cost, first orders for which are due in the coming 6 months. The Chinese are currently forming a disorderly queue to get their hands on it.

The above stream of technology consciousness is a product of Storm Research spending 100% of its time immersed in the Japanese small & mid cap equity landscape. It is a process designed to develop a detailed understanding of what is going on out there & where to find the best ideas.

In the (paraphrased) words of Liam Neeson in Taken:

‘What we have are a very particular set of skills. Skills we have acquired over a very long career. Skills that allow us to add value to people like you.’

Portfolio managers with Japanese equity exposure reading this post are encouraged to get in touch.

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