Apple (NASDAQ:AAPL) investors have been hearing rumors about a new iPad Pro that features the company's new TrueDepth camera system and Face ID for a few months now. That would be an expected move by the Mac maker, as it likes to implement its newest technologies across its product lineup whenever possible, and the iPad Pro is an obvious candidate to be next in line for those features.
The new iPad Pro release could be just around the quarter.
Is the new iPad Pro imminent?
Rosenblatt analyst Jun Zhang has just put out a fresh research note (via Tech Trader Daily). Zhang believes that Apple is preparing to launch a new iPad Pro that features a slimmer bezel and ditches the home button, much like iPhone X. The analyst goes as far as to predict that the new model will be released during the June quarter, meaning it could just be a couple months away, instead of a fall launch.
Zhang estimates that total iPad production for the June quarter will be 16 million to 18 million units, including 6 million to 8 million units that include TrueDepth and 3D-sensing capabilities. Launching the device could help compensate for weaker-than-expected demand for iPhone X. Echoing another analyst's recent sentiments, Zhang thinks Apple needs to bring the iPhone X price down while also releasing a version with a larger display to better address the market. "It is our view many consumers are awaiting an expected 6.1-inch LCD iPhone -- a larger screen iPhone at a lower retail price," Zhang writes.
iPhone X didn't sell particularly well during the important Lunar New Year holiday shopping period, according to the report.
Mitigating excess capacity
It's worth remembering that Apple is investing heavily in the production capacity of vertical-cavity surface-emitting lasers (VCSELs), including in the form of a $390 million prepayment to supplier Finisar. VCSELs are the crucial components that enable 3D sensing, and Finisar is using those prepayments to help fund capacity expansion at its manufacturing facilities in Sherman, Texas.
With no shortage of data points and reports suggesting that iPhone X sales are lagging, that additional capacity risks going underutilized. Finisar is targeting the second half of 2018 for volume production in its Texas facility. That's more of a risk to Finisar than to Apple, but both companies would certainly prefer to sell more of their respective products. Implementing VCSELs in more products would help Finisar's capacity utilization while giving Apple more alternatives to apply its prepayments.
The VCSEL industry is preparing for an Apple-driven boom in the 3D-sensing market, and the Mac maker isn't backing down.
Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.