IHS iSuppli: iPhone 5 is expected to drive smartphone shipments to 346.5 million units in the second half of 2012

Data recently released by the well-known market research organization IHS iSuppli shows that the launch of iPhone 5 is expected to increase Apple's smartphone shipments in the third and fourth quarters of this year, and will further promote the continued rebound trend of global smartphone shipments in the second half of this year, reaching the expected level of 346.5 million units.

Global smartphone shipment forecast for the first half and second half of this year

In the second quarter of this year, Apple's iPhone shipments fell 26% from 35 million in the first quarter to 26 million. Wayne Lam, senior analyst of IHS Wireless Communications Market, pointed out: "In the quarter before each release of a new iPhone model, Apple's smartphone shipments show a clear downward trend. Consumers habitually postpone their plans to buy new phones in order to wait for the new iPhone to be launched. Once the new iPhone is launched, they will rush to buy the latest iPhone model, which will lead to a surge in market demand. IHS expects that the same situation will occur when the iPhone 5 is launched."

The decline in Apple's iPhone sales has led to a 1% decline in global smartphone shipments in the second quarter to 135 million units, compared with 137 million units in the first quarter. However, the launch of the iPhone 5 is expected to put the global smartphone market back on track and bring shipments in the second half of the year to the previously expected level of 346.5 million units. In the first half of this year, global smartphone shipments were only 272.3 million units.

iPhone 5 has a bigger screen

The screens of previous models, including the iPhone 4S, were only 3.5 inches, while the iPhone 5's screen is expected to be about 4 inches; the screen pixels are also likely to be increased from 960×640 on the iPhone 4S to 1136×640, thus maintaining a pixel density of 326 pixels per inch.

"The iPhone 5 is likely to use in-cell touch technology, which embeds the touch sensor directly into the LCD, rather than adding a separate touch layer on the LCD panel, which is what Apple has been using before," said Vinita Jakhanwal, director of small and medium screen research at IHS. "This will help significantly reduce the thickness of the screen. This will also improve picture clarity and extend battery life."

Potential suppliers of iPhone 5 screens include LG Display, Sharp and Japan Display Inc., all of which have mastered embedded touch technology. However, the yield of screens produced using embedded touch technology may be lower than that of traditional LCDs, which may result in suppliers' production capacity being unable to meet Apple's order requirements.

"If Apple adopts a 16:9 widescreen image aspect ratio, the large screen will be more suitable for video playback," said Ian Fogg, principal analyst for IHS Mobile. "Apple's new iPhone will once again bring about a major change in the mobile content market. This time, Apple is expected to re-activate the on-demand subscription market for mobile TV and video."

With the release of iOS 6, Apple will replace Google Maps with its own location and navigation software, Maps, which supports full-turn voice commands, a vector-based engine and a tilt-and-rotate interface.

Near Field Communication in Question

There were also conflicting reports in the media about whether the iPhone 5 has a near-field communication (NFC) chip that can enable electronic mobile payments. While Apple has shied away from the technology in the past, smartphone makers in Google's Android camp have shown great interest in it, selling 106 million NFC-enabled phones in 2011.

Global NFC feature phone shipment growth forecast

"iOS 6 will support Apple's new Passbook app, which will allow users to redeem coupons, movie tickets, boarding passes and loyalty cards, as well as complete other payment transactions, through the iPhone 5," said Jack Kent, senior analyst for mobile at IHS. "With its bundled shopping capabilities, Passbook will become an effective tool for managing mobile transactions, mobile money services and mobile commerce. If it can be integrated with the new location-based platform, Apple will open up new revenue streams and a new frontier in its competition with Google."

Apple may choose to bundle Passbook with new hardware support in the iPhone 5, such as an NFC chip. Dr. Jagdish Rebello, director of consumer and communications at IHS, noted: "If the iPhone 5 does include NFC, Apple will help global NFC-enabled phone shipments grow 118% to 233 million units in 2012, compared with a 94% growth in 2011, and 81% to 420 million units in 2013. If the iPhone 5 does not support NFC, the growth rate of NFC-enabled phone shipments is expected to be significantly lower in both 2012 and 2013."

Promoting LTE network construction

Since the new iPads launched earlier in 2012 are equipped with 4G LTE (Long Term Evolution) capabilities, IHS expects that the new iPhones will also offer LTE support for the first time. This will significantly boost the growth of LTE subscriptions worldwide, although this will depend on the wireless spectrum and the service providers that support it.

"In the U.S., the new iPad currently supports Verizon Wireless and AT&T's LTE networks. However, it does not support LTE networks in other regions, including Europe," Fogg said. "If the iPhone 5 offers global LTE spectrum support, it will help to boost the global LTE user base and increase profits for LTE network service providers."

Semiconductor Market

Apple has become the world's largest semiconductor purchasing original equipment manufacturer (OEM), at least in part due to the iPhone business. The company is also purchasing semiconductors at a rate that exceeds other top manufacturers, consolidating its position in the chip market. According to the IHS iSuppli OEM Semiconductor Spend Analysis report, Apple is expected to purchase nearly $28 billion in semiconductors this year, up 15% from $24 billion in 2011.

Because Apple has a significant impact on the semiconductor supply chain, the iPhone 5 will help revitalize the NAND flash memory demand market.

"The NAND flash memory market has been turbulent this year, with demand from multiple applications falling short of expectations," said Michael Yang, senior principal analyst for memory and storage at IHS. "Strong sales of the iPhone 5 could help the NAND market out of its troubled waters."