Baird Analyst Breaks Down Apple's In-House Manufacturing Report

Apple Inc. AAPL is reportedly looking to manufacturer its own screens in-house for the first time, but this shouldn't necessarily come as a surprise.

The Analyst

R.W. Baird's Will Power discussed Apple's outlook during CNBC's "Squawk Box" on Monday.

The Thesis

Reports that Apple is looking to manufacturer its own screens can be traced back to its 2014 acquisition of LuxVue, in which it acquired dozens of patents related to Micro LED displays, Power said.That's why it shouldn't necessarily come as a surprise, but for the time being, it's not clear if Apple will proceed with in-house manufacturing over time.

There are reasons for members of Apple's supply chain to be concerned, especially if they're left out of the ecosystem or seen their involvement diminish. At the same time, there's no reason why suppliers of components can't introduce their own innovation that "helps the entire ecosystem" through continuous improvements in technologies.

Power said expectations call for Apple to release two different size OLED iPhone devices in 2018. The release of new devices could come at a time when Apple continues to grow its top-line at a double-digit rate and its upcoming cycle could help support this trend.

Price Action

Shares of Apple were trading lower along with the broader market, down 1.9 percent at $174.54 Monday afternoon.

Apple supplier Universal Display Corporation OLED was crushed, down 13.3 percent at $107.50.

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