[Insights] Optimism Arises in Smartphone Market as High-End Lens Demand Surges

2023-10-24 Consumer Electronics editor

Major optical manufacturer, Largan Precision, held its online Q3 earnings conference on October 12, 2023. During the session, Chairman Lin En-ping’s responses to inquiries from analysts conveyed that the previously sluggish smartphone market might finally witness an upturn in Q4, as the iPhone 15 Pro Max’s robust pre-order performance surpassed market expectations. This bodes well for downstream customers’ willingness to procure lenses, and high-end lens demand is expected to rise.

TrendForce’s Insight:

  1. Positive Signals Emerge from Largan Precision’s Statement

Since the beginning of 2023, the global smartphone market has been experiencing a general slump, influenced by factors such as China’s post-pandemic economic recovery falling short of expectations, rampant inflation, and uncertainty about economic prospects. Looking back at the previous Q1 and Q2 earnings conferences held by Largan Precision, Chairman Lin En-ping consistently displayed a relatively pessimistic outlook when addressing questions from financial analysts. This pessimism can be attributed to the subdued end-user demand, resulting in a natural decline in procurement momentum among downstream customers, which has made it challenging for Largan Precision to foresee clear future order demand.

However, with the arrival of Q4, the traditional peak season for smartphones, Chairman Lin En-ping provided a more positive response during the latest conference. This shift in stance can be attributed to the better-than-expected pre-order status of the high-end iPhone 15 Pro Max and the subsequent improvement in procurement momentum among downstream customers. Furthermore, there has been a resurgence in overall demand for high-end lenses. It is anticipated that the end demand for smartphones may improve in the upcoming Q4.

2. Increased Willingness for Lens Upgrades

In the case of the iPhone 15 Pro Max, Apple made significant hardware upgrades to the camera module, addressing the feature consumers care about the most. By incorporating an exclusive tetraprism periscope telephoto lens module into the limited space within the device, they achieved a 5x optical zoom capability. This camera upgrade became a highlight of the product launch and contributed to the iPhone 15 Pro Max exhibiting stronger pre-sale momentum compared to other models. Consequently, the entire supply chain benefited from this success.

Notably, Chairman Lin En-ping’s shift from his prior pessimistic stance during the earnings conference suggests an optimistic outlook for the fourth quarter of 2023, with an anticipated upturn in end-user demand for smartphones.

Additionally, given the evident strong pre-sale performance of the iPhone 15 Pro Max in the overall market, it is expected that brand manufacturers will be more inclined to enhance their camera modules. This enhancement could involve incorporating more lens groups in periscope-style lens modules, offering a greater range of physical variable apertures, or adopting glass-plastic hybrid lenses, especially in higher-tier smartphone hardware configurations. Anticipating this development trend, we can expect to see a resurgence in the trend of upgrading smartphone camera capabilities.

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