Largan, a key supplier for Apple, has unveiled crucial insights into its outlook for this year and next. According to statements attributed to Largan’s CEO, Lin Enping, the company is poised to maintain stable prices and leverage competitive advantages, even amidst changes in the market.
Key Insights from Largan’s CEO
Lin Enping highlighted several important points that shape Largan’s strategic positioning:
- Stable Prices: Despite new flagship specifications being transferred to other models in the second half of this year, the overall price (ASP) will remain unchanged.
- Apple Partnership: As Apple’s largest lens supplier, Largan will equip both the new iPhone 16 Pro and Pro Max with quad-reflective (periscope) cameras, maintaining the same specifications as the iPhone 15 Pro Max.
Implications for Largan’s Market Position
These insights lead to several critical inferences about Largan’s position in the market:
- Dominance in Lens Supply:
- Largan’s shipment price will remain unaffected by Yujingguang becoming a new supplier in 2H24, indicating Largan’s dominance in supplying quad-reflective lenses for iPhones.
- Largan is likely to be the exclusive supplier of quad-reflective lenses for the iPhone 16, maintaining the same unit price a year after mass production, which is rare in the Apple supply chain.
- Negotiation and Competitive Advantages:
- Largan has significant competitive and negotiation advantages, enabling it to maintain stable unit prices for iPhone 16’s quad-reflective lenses.
- Apple cannot leverage other lens orders or future orders to force Largan into reducing prices, suggesting Largan’s negotiating power extends to other lens orders and future contracts.
Expected Financial Performance
Lin Enping also provided insights into Largan’s financial outlook, emphasizing factors influencing gross profit margins:
- Capacity Utilization: With full capacity utilization in the fourth quarter, Largan is set to maximize its production capabilities.
- Price and Yield Rate: The stability in prices and improved yields due to unchanged specifications suggest that Largan’s profits in the second half of the year could surpass market expectations.
Conclusion
In summary, Largan is positioned strongly for the remainder of this year and into 2024. The company’s ability to maintain stable prices, despite market changes and new suppliers, underscores its competitive edge. With full capacity utilization and improved yields, Largan’s financial performance is expected to exceed market expectations, reinforcing its pivotal role in the Apple supply chain.
- Stable Prices: Maintaining ASP despite market changes.
- Exclusive Supplier: Likely exclusive supplier for iPhone 16 quad-reflective lenses.
- Negotiation Power: Strong competitive and negotiation advantages.
- Financial Performance: Full capacity utilization and improved yields boosting profits.
Largan’s strategic positioning and robust partnership with Apple highlight its significant role in the smartphone lens market, ensuring sustained growth and profitability.
Source : Medium.com
