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Buy iPhone X supply chain shares, KGI says

  • KGI's Ming-Chi Kuo says investors should buy up Apple supply chain shares
  • Kuo also revised his shipment expectations from 45-50m units in 1H2018 to 40m units
  • Kuo also thinks there may be concern about consumer acceptance of facial recognition
An attendee checks out a new iPhone X during an Apple launch event in Cupertino, California, U.S. September 12, 2017.
Stephen Lam | Reuters
An attendee checks out a new iPhone X during an Apple launch event in Cupertino, California, U.S. September 12, 2017.

KGI analyst Ming-Chi Kuo said in a note this week that investors should buy shares of firms working in Apple's supply chain to provide parts for the Apple iPhone X.

Kuo also revised his iPhone X unit shipments forecast to 40 million units for the first half of 2018. Kuo accurately predicted that Apple wouldn't sell the iPhone X in September along with the iPhone 8 and iPhone 8 Plus — it will instead ship in November. Kuo also originally expected Apple to ship 45 million to 50 million iPhone X units.

"We think some will be concerned about market acceptance of Face ID and the pricing of the iPhone X, before robust pre-order result is confirmed," Kuo said. "Therefore market views may be mixed before pre-order of iPhone X begins on October 27. Amid mixed market views, we expect shares of the Apple (US) supply chain to be volatile or even corrected in the near future. We recommend investors seize the opportunity to accumulate supply chain shares."

Kuo's note includes a few pros and cons on Apple. He said that KGI is impressed with augmented reality and that Apple has already taken the lead. He also thinks that new features like the full-screen design and face unlock will help drive demand.