This nails the Sony Rumor.
Why Omnivision's Sensors Will Be in the iPhone 5 - Not Sony's
Omnivision Technologies Inc (Nasdaq: OVTI) is the leading maker of CMOS imaging sensors for smartphones, iPads and digital still cameras. Omnivision has been a key player in the Apple (Nasdaq: AAPL) supplier food chain because Omnivision sensors are in the popular iPads and iPhones.
On April 4th, 2011, a rumor that Sony (SNE) might have won the socket for image sensors in the iPhone 5 caused OVTI shares to decline 8% (after being down over 12% intraday). The stock continued to decline (along with the market at the time) to $29.79 this week – a loss of 21% since the Sony rumor.
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Response to the Sony Rumor
Various analysts came out that day in defense of Omnivision:
A bunch of things suggest OmniVision will, in fact, get the iPhone 5 socket, he writes: OmniVision can get as many as 72,000 wafers per month working with Taiwan Semi (TSM), whereas Sony won’t likely get to 50,000 wafers per month for CCD and CMOS image sensors till March of 2012, giving OmniVision a big capacity advantage, in his view. Also, in 8-megapixel sensors, Gill sees OmniVision having a technology lead with its “BSI-2” product; TSM’s manufacturing should lead to cheaper parts than Sony’s; the TSM fabrication means OmniVision’s parts would be near the iPhone’s assembly in Taiwan; and, on a business basis, “Why would Apple use a competitor part from Sony?”
Note also that in July 2010, Sony’s CEO essentially implied that they can’t produce the image sensor volume needed:
If the competition in imaging devices were strictly based on volume and cost, our approach wouldn't succeed. We don't have the large-scale fabs that our rivals do, and we won't build them. Fortunately, we can compete in device quality, and we can continue to add functions that make our customers happy.
Until now, discussion of OVTI's sensors being on board the iPhone 5 has been purely speculative.
Reuters Gave the Best Clue so Far...
Recent information makes it apparent that Sony is NOT the image sensor provider for the iPhone 5.
* A Reuters press release Wednesday indicated that their sources have disclosed that Taiwan-based Largan is the chosen supplier of camera “modules” for the iPhone5. A camera module is the lens and housing that the CMOS sensor is embedded in.
“Suppliers to the new iPhone include camera module maker Largan Precision Co Ltd, touchscreen panel maker Wintek Corp and case maker Foxconn Technology Co Ltd, two of the people said.”
* Sony makes their own sensor modules.
* Omnivision's CMOS sensors are typically embedded within Largan camera modules.
If Sony normally ships their own sensor modules for their CMOS camera sensors, then it’s highly likely that Sony’s sensors are not on board the iPhone 5 because Largan’s modules are.
Thus, the April 4th rumor about Sony is probably false. Not to mention that Sony can’t supply the volume that AAPL needs and the March 11 Japan earthquake has caused supply disruptions in Japan that would seem to benefit Omnivision immensely.
Your betting the Sony rumor is wrong based on a rumor that Largan will be the new module supplier?
Now that's real smart.
Why not Aptiva? or anyone else.
Saying Largan will be the supplier is like saying Goodyear is having a good year so Chysler will have a good year.
nothing will kill the sony rumor but a teardown of a iphone5. and as far as the sne rumor, besides implying that aapl was using sne for iphone and ipad (which obviously would apply to a future version--5--since ovt's in current versions), the sne ceo also said that parts being sent to aapl would be delayed because of the quake. this, which wasn't really reported by the press, makes sense out of the delay of launch of iphone 5 to september instead of june.
the ovt bsi-1 is the only stuff that's been in use long enough to qualify for aapl whereas sne's bsi-2 made w/ bulk is already in phones on the market. ovt's bsi-1 is aluminum metalization i believe on 200mm wafers of bulk; whereas, sne's bsi-2 is copper metalization on 300mm wafers of bulk. because sony's using 300 and not 200mm like ovt, even though copper's more expensive, sne may be able to compete on price and definately in my opinion is much better quality.
sne's bsi sensor fab is on an island off japan that was not effected by the quake. although sne does make it's own modules for its dsc and camcorders, i don't know if that's necessarily the case for their mobile products probably because they're real secretive like ovti.
what's interesting is that i know for a fact, lg innotek made the module for the iphone 4, why would aapl switch to a new module maker? possibly to accomodate a new sensor maker? it's all still speculation guys. the barron's blogger is no different than tina or me as far as i can see. he's just missing the parts of the puzzle provided by ashok and tristan and other taiwan friendly analysts. but we'll see. put your money where your mouth is and buy, buy, buy and help the tina's make more money trading options. and finally, obviously don't rely on this, do your own due dilligence.
Who is Aptiva?
If Omnivision is in Apple now, how can this guy think that Apple's decision to change camera module suppliers is good?
The most accurate man on Wall Street, Ashok Kumar, told us last April that Sony would be supplying the next generation 4G iPhones.
CUPERTINO, Calif. (TheStreet) -- Apple(AAPL_) is upgrading its camera for a revamped, presumably 4G version of the iPhone in 2011.
More on AAPL
It's heart-stopping, to be sure. While Apple has yet to introduce the 2010 iPhone, the company has started to make supplier selections for next year's version. And at least one big change with the fifth iteration of the iPhone will be the camera.
Hello Sony(SNE_), goodbye OmniVision(OVTI_). Apple has picked Sony's 8-megapixel camera chip for the 2011 iPhone, according to supply and manufacturing sources, said Rodman Renshaw analyst Ashok Kumar.
I think he meant to say Aptina. A simple one letter typo.
Do you really think this Kumar clown is the answer man? Tell ya what, as long as you're going to waste all your money soon anyway, just send it to me will ya? LOL
If Not Sony, Then Who Else?
That leaves us with only a few other possible suppliers who would have their image sensors onboard the iPhone 5:
* Aptiva – Micron’s (MSVS.PK) spinoff called Aptiva has inferior technology.
* Samsung (SSNLF.PK) – Since it was announced Tuesday that AAPL is suing Samsung it would be very unlikely Samsung’s sensors are going to be into the iPhone 5.
* ST Micro – a less likely player
Of the foregoing players, Omnivision is the only image sensor company with high quality BSI-2 (Backside Illumination) image sensors that doesn’t have other negative issues with Apple such as litigation with Apple, or directly competing with Apple in the smartphone market.
Omnivision’s 5-megapixel cameras are already in the iPhone 4 and the camera on the iPhone 4 has garnered rave reviews. And the iPhone 3GS uses a 3.2-megapixel camera from Omnivision. Why would Apple not want to continue the trend of offering high quality cameras on its iPhones that can also be supplied in the volume it needs?
Finally, if Reuters is correct that Largan of Taiwan is the chosen iPhone 5 sensor module provider, then that essentially shuts down the Sony/iPhone5 rumor once and for all. Besides, why would AAPL give business to one of its strongest competitors?
Hints During Apple's Earnings Conference Call
Providing yet another clue, Apple's earnings conference call Wednesday after the close, Tim Cook mentioned a list of suppliers from Japan that did not include Japanese image sensors:
Regarding our global supply chain, as a result of outstanding teamwork and unprecedented resilience of our partners, we did not have any supply or cost impact in our fiscal Q2 as a result of the tragedy, and we currently do not anticipate any material supply or cost impact in our fiscal Q3. To provide a bit more color on this, we sourced hundreds, literally hundreds of items from Japan, and they range from components such as LCDs, optical drives, NAND Flash and DRAM to base materials such as resins, coatings and foil that are part of the production process at several layers back in the supply chain.
Once market players put these facts together, Omnivision shares should resume the upward trajectory they were on before the Sony rumor