Finally, a Foldable iPhone... Which Companies Will Profit? [Weekend Money]

New Form Factor Raises Hopes for a New Value Chain

Samsung Holds Panel Monopoly, but Blockbuster Success Uncertain

"Considering Price and Sales Volume, a Boon for MCE Companies"

In the second half of this year, Apple is expected to launch its first foldable smartphone. This marks Apple's entry into the foldable market, which Samsung has dominated for years with its Galaxy Z Fold series.

Investors have already begun searching for potential beneficiaries. The emergence of a new type of device leads to the creation of a new value chain. This development opens up new opportunities for companies that manufacture components for the foldable iPhone.

On March 21, IBK Securities stated, "It is important to focus on materials, parts, and equipment (MPE) companies within the foldable value chain," but also pointed out, "It is time to distinguish between the strong and the weak among these companies."

A New Value Chain Created by a New Form Factor

Expected image of Apple's foldable iPhone, the 'iPhone Fold'. iPhone Community

The foldable iPhone will feature a 5.5-inch external display when folded, making it not much different from a regular iPhone in use today. When unfolded, the screen expands to 7.5 inches—comparable to a small tablet. The folding method is an "in-folding" type, meaning the screen folds inward. Like the Galaxy Z Fold, the display is hidden inside when the device is closed. Samsung Display will supply all the panels, even establishing a dedicated production line for this purpose.

The primary concern is the price. The expected retail price ranges from 3.5 million to 4.3 million won, depending on storage capacity. It is anticipated to be more expensive than its competitor, the Galaxy Z Fold7. Since the first foldable iPhone may be pricier than an already proven competitor, questions are being raised about how well it will actually sell.

There are already projections that the foldable iPhone's sales may only account for about 5% of total iPhone shipments. While Apple sells over 200 million iPhones annually, the foldable model may represent just over 10 million units of that total.

Kang Mingu, a researcher at IBK Securities, commented, "If the sales volume of the foldable model remains at about 5% of total iPhone shipments, the impact on panel suppliers and smartphone manufacturers will not be significant."

However, the situation is different for the companies supplying materials and components. Materials, parts, and equipment (MPE) refers to firms that produce the raw materials and detailed components required to manufacture finished products. These include companies making special films that enable the screen to fold, organic materials for OLED displays, and flexible printed circuit boards that connect circuits.

Why is this a greater opportunity for them?

A single foldable smartphone contains far more materials and components than a typical smartphone. It has two screens and requires specialized parts to support the folding mechanism. Researcher Kang stated, "The launch of the foldable iPhone could be an event that allows domestic MPE companies to more than double their total addressable market (TAM)." Simply put, TAM refers to the total size of the market that a company can potentially sell into. If that market size doubles, the revenue opportunity itself also doubles. This is why even with modest sales, a meaningful opportunity can arise.

"Even Samsung (Korea) Has a Panel Monopoly..." Apple's Concerns and Paradox

Yet, there are expected to be winners and losers even within the MPE sector. Researcher Kang explained, "Because Samsung Display is the sole supplier of panels, it has paradoxically become even more difficult for domestic companies to be included in the value chain."

Apple is well-known for deliberately diversifying its supply chain to avoid over-reliance on a single country or company. Since Samsung Display already monopolizes panel supply, analysts believe Apple may intentionally reduce the proportion of Korean companies in the remainder of its materials and components supply chain.

It appears that Chinese companies have filled the gap. Researcher Kang noted, "Due to Apple's supply chain diversification policy, aimed at reducing reliance on the domestic display industry, a significant number of Korean companies related to foldable devices have failed to join the value chain."

The Korean Companies That Survived: Three Firms Identified by IBK Securities

Samsung Electronics Galaxy Z Fold7 and Flip7

With Chinese companies moving in, which Korean companies have managed to secure a spot in the foldable iPhone value chain?

IBK Securities has highlighted three companies of interest: Duksan Neolux, Fine M-Tec, and BH.

These three firms have two things in common: ① They have secured a high market share within the foldable iPhone supply chain. ② They are difficult to replace with other suppliers in the short term.

Among these, IBK Securities is particularly focused on Duksan Neolux.

The core materials technology supplied by Duksan Neolux is 'CoE (Color Filter on Encapsulation)'. This is a materials technology in which a color filter is applied directly on top of the OLED panel, making the panel thinner and clearer. This is especially advantageous for devices like foldables, where thinness is crucial. The technology also has high scalability.

Researcher Kang predicted, "CoE will be rapidly adopted not only in foldable smartphones but also in current bar-type smartphones, tablets, and IT devices such as laptops." The analysis suggests that the foldable iPhone could serve as a catalyst, enabling this core material to be used in a much broader market.

This content was produced with the assistance of AI translation services.