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Catcher: Most smartphones will have glass backs, metal frames

New iPhones are expected to sport the combination

Catcher Technology Chairman Allen Horng said he saw substantial year-on-year sales growth in the second half of 2017. (Photo by Cheng Ting-Fang)

TAINAN, Taiwan -- Chairman Allen Horng of key Apple metal frame and casing supplier Catcher Technology on Monday said a combination of glass backs and metal frames would become commonplace for smartphones in the future.

"We think the combination of glass backs and metal frames would become mainstream for future smartphone casing design after a major brand with great market share adopts this new concept," Horng told reporters after the company's annual general meeting. He did not mention Apple by name, but all three upcoming iPhone models this year are expected to have glass backs and metal frames.

Market watchers expect the premium line with curved displays will sport stainless steel frames, while the other two flat-screen models will adopt aluminum ones.

According to Jeff Pu of Yuanta Investment Consulting, Catcher will be supplying aluminum frames for the flat-screen iPhone models.

Horng said the use of glass backs and metal frames could boost wireless charging and ensure better connectivity to future 5G networks. Wireless charging is a new feature expected in the new iPhones.

However, a glass chassis will not withstand thermal and heat radiation as well as a metal one, according to Horng. In the past few years, iPhones adopted metal bodies to be thinner and sleeker.

But Samsung Electronics has been using glass bodies for its S7 and S8 premium smartphones. Last year, market watchers turned pessimistic about Catcher's outlook following Apple's decision to give iPhones a new look this year with glass bodies.

But Catcher managed to secure Apple orders for metal frames and it is also assembling frames and glasses for some iPhones this year. China's Biel Crystal, Lens Technology and Corning are suppliers for these glass components.

"We don't think the overall margin would change much but the margin would be a bit lower for some part of our assembly works," said Horng.

Yuanta's Pu said while Catcher's revenue would not be affected this year, some impact could be seen in its bottom line.

"In the past, when Catcher shipped whole metal body to Apple, its average margin would fall around 45%. But when it makes metal frame together with the assembly work, the average margin is expected to fall to between 35% and 40%," said Pu.

Horng said demand in the second half of the year would be "very bright" and he expected a substantial year-over-year growth from a year ago across both smartphone and notebook segments.

He added that Catcher's capital expenditure in 2017 would rise from 8.5 billion New Taiwan dollars ($280 million) last year because demand for 2018 looked healthy.

Catcher supplies metal casing for iPhones, iPads and Macbooks. For all of 2016, Apple accounted for more than 65% of Catcher's revenue of NT$79.11 billion.

The Taiwanese company also counts HP, Dell, Lenovo Group, Amazon, Sony and HTC as its customers.

For all of 2016, Catcher generated 4% less revenue from a year ago due to lukewarm iPhone 7 demand.

For the January-March quarter, Catcher's revenue dropped 13.4% year-over-year to NT$14.58 billion while net profit nearly halved to NT$2.1 billion due to unfavorable foreign exchange rates in the period.

Shares of Catcher closed 1.1% lower on Monday at NT$358. They have advanced more 60% so far this year.

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