WSJ : Credit Suisse Was Alerted to Private Banker’s Misconduct Years Before Crim

Credit Suisse Was Alerted to Private Banker’s Misconduct Years Before Criminal Charges
Regulatory report says some executives turned a blind eye to fraud. Credit Suisse says it revealed nothing incriminating against the bank.

Credit Suisse Group AG CS +1.81% overlooked red flags for years while a rogue private banker stole from billionaire clients, according to a report by a law firm for Switzerland’s financial regulator.

The private banker, Patrice Lescaudron, was sentenced to five years in prison in 2018 for fraud and forgery. He admitted cutting and pasting client signatures to divert money and make stock bets without their knowledge, causing more than $150 million in losses, according to the Geneva criminal court.

The regulator, Finma, publicly censured Credit Suisse in 2018 for inadequately supervising and disciplining Mr. Lescaudron as a top earner, and said he had repeatedly broken internal rules, but it revealed little else about the bank’s actions in the matter. Credit Suisse said it discovered Mr. Lescaudron’s fraud in September 2015 when a stock he had bought for clients crashed.

However, the report, commissioned by Finma in 2016 and reviewed by The Wall Street Journal, found Mr. Lescaudron’s activities triggered hundreds of alerts in the bank that weren’t fully probed in the 2009-15 period studied. In addition, around a dozen executives or managers in Credit Suisse’s private bank knew Mr. Lescaudron was repeatedly breaking rules but turned a blind eye, proposed lenient punishment for his misconduct or otherwise glossed over the issues because he brought in around $25 million in revenue a year, the report found.

It said Mr. Lescaudron’s “disregard of internal directives and guidelines, the inadequate safeguarding of client documentation as well as unauthorized settlements of client transactions had been known to the bank since June 2011.”

The report found the irregularities were analyzed and escalated to a certain extent, but not enough. “None of the parties involved felt responsible for conclusively analyzing the already known as well as the resulting questions and drawing the necessary conclusions,” it said.

A business-risk manager who reported some of the incidents to superiors told law-firm investigators that he had feared further escalation would be seen as disloyal or that he would lose his job, according to the report.

Credit Suisse lost a bid last year in Switzerland’s Supreme Court to prevent the 272-page report by Swiss law firm Geissbühler Weber & Partner from being accessed by Geneva prosecutors still investigating the bank over the matter.

According to the report, the bank fired two executives after its own investigations into the fraud, and three more got written sanctions in their employment files.

A Credit Suisse spokesman said the report was part of the early stages of the review Finma concluded in 2018. It said the review “did not reveal any facts that would support the criminal complaints against Credit Suisse.” After Finma’s 2018 rebuke, Credit Suisse said it had improved its systems and added hundreds more compliance staff.

Mr. Lescaudron served a two-year pretrial detention and was released in 2019. He killed himself last year.

Finma declined to comment. The law firm said it couldn’t comment. The Geneva prosecutor’s office declined to comment on its investigation. A lawyer for Mr. Lescaudron’s family declined to comment.

The Journal reviewed a copy of the law firm’s April 2017 report obtained by some former clients of Mr. Lescaudron who formed a group called CS Victims. The former clients include Bidzina Ivanishvili, a billionaire former prime minister of Georgia who is suing Credit Suisse in Singapore and Bermuda for around $800 million, alleging breach of trust. Credit Suisse is contesting Mr. Ivanishvili’s claims and denies any wrongdoing.

A spokesperson for CS Victims said the report shows Credit Suisse ignored alerts and warnings and had multiple opportunities to prevent Mr. Lescaudron’s crimes but chose not to. The spokesperson said the bank “must now accept responsibility and compensate the clients without delay.”

The law firm’s report said it didn’t find misconduct by Credit Suisse employees executing Mr. Lescaudron’s falsified orders. But it said the fact the orders could be falsified for so long without anyone noticing showed weaknesses in the bank’s antifraud measures.

The high-profile case is among several controversies that have bruised Credit Suisse’s standing with shareholders and the global rich who expect it to be a fortress for their money. Finma started enforcement proceedings in September over the bank’s handling of employee surveillance after a spying scandal, and Swiss federal prosecutors charged it with failing to prevent money laundering through the bank by a Bulgarian criminal organization and an employee more than a decade ago.

In January, Credit Suisse said it would post a fourth-quarter 2020 loss because of an $850 million legal charge for toxic security sales.

Credit Suisse said it was cooperating with Finma in the spying enforcement proceedings and would incorporate lessons learned. It denies the allegations in the federal criminal charges.

Chief Executive Thomas Gottstein said in December the bank would be more disciplined to avoid future litigation.

Mr. Lescaudron joined Credit Suisse in 2004 after working for a cosmetics company in Russia and as an auditor. He hadn’t worked in banking but swiftly became one of the bank’s top revenue producers as a handler to Russian and post-Soviet state billionaires.

In 2008, he was verbally warned over an unauthorized client transaction, the first of four disciplinary measures in his time at the bank, according to the report.

Between 2010 and 2015, emails from Mr. Lescaudron to Mr. Ivanishvili’s representative set off more than 180 alerts for possible data breaches, the report found. It said the bank didn’t analyze those alerts and emails in detail, and that Mr. Lescaudron was able to conceal his actions for years by sending clients spreadsheets he made instead of official account statements, breaking bank rules.

At his trial, Mr. Lescaudron said the self-produced spreadsheets were central to his fraud.

In 2011, the bank’s security services reviewed personal accounts of Mr. Lescaudron at Credit Suisse after an antifraud system flagged some large deposits. He received a verbal warning for not correctly disclosing external bank and brokerage accounts, according to the report.

That summer, the same antifraud system detected undocumented direct share trades among three of Mr. Lescaudron’s clients that should have gone through multiple checks, the report said.

Some of the trades were in a California drugmaker, Raptor Pharmaceutical Corp., whose stock Mr. Lescaudron had bought for himself, too.

The alerts set off multiple probes within the bank into the transactions, including into whether Mr. Lescaudron had recommended the Raptor shares to clients or profited at their expense, and whether there was any relationship between the clients in the trades.

The law firm’s report found the bank still hadn’t clarified the issues a year later, and that some of the people studying the transactions and trades among clients had only partial information, or thought it was someone else’s job to figure out what was going on.

Part of the problem, according to the report, was that Mr. Lescaudron’s supervisors and the control staff around him changed frequently as the bank and his division went through a series of restructurings after the 2008 financial crisis.

In summer 2012, according to the report, risk managers in the private bank discovered Mr. Lescaudron had entered incomplete or implausible information about client backgrounds and the origin of their funds, to meet a deadline from compliance. The breach, along with the issues from 2011, led to disciplinary proceedings.

The business-risk manager who raised the alarm on the problems stacking up around Mr. Lescaudron said the bank should consider firing him. Instead, in early 2013, Mr. Lescaudron got a written reprimand and a small deduction from his 2012 bonus. A plan was made to split Mr. Lescaudron’s client activities so that he no longer executed transactions. But it took more than six months to implement and wasn’t sufficiently monitored, according to the report.

In August 2014, an internal controls group banned new purchases of Raptor shares for Mr. Lescaudron’s clients because the stake at the bank hit a 10% threshold requiring filings to the Securities and Exchange Commission. The ban wasn’t enforced, though, and more Raptor shares were bought for the clients, the report found.

That year, Mr. Lescaudron’s bosses nominated him for promotion to managing director, which was rejected, according to the report.

In September 2015, Raptor reported disappointing drug-trial results. Its shares sank, prompting margin calls on positions some of the clients didn’t know about. Credit Suisse questioned Mr. Lescaudron and quickly fired him.

At his trial, Mr. Lescaudron said by then he had given up trying to cover up the fraud. He said his aim was always to make big returns for his clients, and some money for himself, too. He apologized to Credit Suisse, former colleagues and his clients for his actions.

A former boss testified that he couldn’t explain how the activities weren’t detected. A bank lawyer told the court Credit Suisse’s control systems overall had functioned well in monitoring Mr. Lescaudron.

FT : More than 30 UK bidders set to pursue 10 freeport zones

More than 30 UK bidders set to pursue 10 freeport zones
Brexiters regard low-tax special economic areas as benefit of leaving the EU

At least 30 ports and airports around the UK are considering bids for just 10 slots to become freeports — special economic zones that will benefit from lower taxes — which were presented by Brexiters as a benefit of leaving the EU.

The level of interest will come as boost to Boris Johnson, who has hailed freeports as a key tool in the UK prime minister’s “levelling-up” agenda aimed at tackling regional inequality.

The deadline for bids in England is Friday — with winners announced by the spring — but the process is moving more slowly in Wales, Northern Ireland and Scotland.

Before becoming chancellor, Rishi Sunak presented freeports as one of the benefits of Brexit. In reality the UK had several freeports while it was within the EU and axed them in 2012 when the Conservatives were governing in coalition with the Liberal Democrats.

The Treasury is currently consulting on specific advantages that could be conferred to selected sites, which can be as large as 45km across.

As a backbench MP in 2017, Mr Sunak wrote a paper advocating freeports — a zone considered to be outside its home country for customs purposes, allowing goods or components to be brought in tariff-free, only incurring duties at the point of export.

Ministers also want to offer potential tax breaks such as lower employer National Insurance contributions, R&D tax credits, lower stamp duty and a light-touch planning system.

But there is scepticism about Mr Sunak’s claims that freeports would create “national hubs for trade” and “turbo-charge” the UK’s economic recovery. Instead industry is concerned it would instead simply shift investment from one location to another.

Moreover, a recent European Parliament report on the risks of tax evasion and money-laundering in freeports, highlighted one in Luxembourg that had become a depot to store high-value art.

Adam Marshall, head of the British Chambers of Commerce, has said his members were nervous that jobs could be “displaced”, while an internal Treasury document conceded that “zone-based policy can have a displacement effect”.

Under Mr Sunak’s plans, there will be at least seven freeports in England and one each in Scotland, Northern Ireland and Wales.

The Scottish government last month announced its own plan for special economic zones, dubbing them “green ports”. These would offer a package of tax and customs reliefs but would also have to pay the “real living wage”, commit to sustainable growth and contribute to Scotland’s net zero carbon target.

A list of 33 potential candidates (some including more than one site) has been compiled by an industry lobby group, based on a mix of public and private pronouncements. It includes 17 in England, eight in Scotland and four in each of Wales and Northern Ireland.

The geographic spread of confirmed bidders and the limit on the number of freeports suggests there will be some intense local battles. On the north-east coast, for example, Tyneside, Teesport and Humberside have applied.

At least two UK airports — East Midlands, and Bournemouth International, which has teamed up with the nearby port of Poole — have also said they will bid.

London Gateway, the container port on the Thames, has submitted a joint application with Tilbury — a commodities port — and Ford Dagenham, where the carmaker has an engine plant.

The Welsh government has not yet opened a bidding process because it is concerned the low-tax zones will simply attract businesses that would have located elsewhere and result in lost revenue.

A Welsh government spokesman said: “We remain open to the prospect but continue to seek reassurance from the UK government about the associated risks, and that they will be treated as favourably as freeports in England.”

Northern Ireland has also not yet opened its bidding process.

WSJ : A New Road for Mercedes-Benz Offers Hope for Volkswagen Too

A New Road for Mercedes-Benz Offers Hope for Volkswagen Too
Daimler’s shareholder-friendly decision to split its car and truck divisions will be hard for Germany’s largest car maker to ignore

Germany is slowly becoming more welcoming to stock investors. If Daimler and Siemens can shake off the old obsession with scale, even change at Volkswagen VOW -0.22% may not be too much to hope for.

Late on Wednesday, automotive group Daimler said it will split in two, separating its flagship Mercedes-Benz DMLRY 5.98% car division from its often-overlooked truck unit—the global leader in big rigs thanks to Freightliner and other brands. The move wasn’t a huge surprise after years of rumors and preparations. But the decision to finally press the button couldn’t be taken for granted at a company that embodies the German industrial tradition, and the structure of the deal was more shareholder-friendly than expected. Shares have risen 8% since the announcement.

The case for a split is the classic one against conglomerates: Heavy trucks and cars don’t have much in common, and separate stock-market listings will focus management and release trapped value for shareholders. This was particularly obvious for Daimler because each of the two units has a close peer— BMW for Mercedes-Benz and Volvo AB for Daimler Trucks—that usually make better margins and fetch higher valuations.

Crucially, Daimler is distributing a “significant majority” of stock in its truck business to its shareholders, rather than planning an initial public offering. In 2019, Volkswagen went down the IPO route with its own truck spinoff, Traton, only to create a company with very limited stock-market liquidity in which it still owns a majority stake. Daimler has learnt the lesson.


It has perhaps also learned from Siemens, another German industrial icon that has slimmed down in recent years by selling or spinning off businesses. The strategy became the leitmotif of former chief executive Joe Kaeser, who also sits on Daimler’s supervisory board. Mr. Kaeser retired from Siemens on Wednesday with the stock at a record high, in stark contrast to U.S. peer General Electric.

Historically, Germany has been more suspicious of stock markets than its economic peers. Shares listed in the country were worth about 56% of its gross domestic product in December, according to data provider CEIC, compared to more than 100% in France, the U.K. and Japan, and almost 150% in the U.S.

Relations between German companies and public markets may be improving, driven in the automotive industry by technological change and the awareness that Tesla’s high stock-market valuation is a competitive advantage. On a call with journalists, one local reporter worried that splitting Daimler would make it vulnerable to takeovers; Chief Executive Officer Ola Källenius replied that having undervalued assets was the real vulnerability.

The acid test of Germany’s commitment to using capital more efficiently will be the turnaround underway at Volkswagen, the country’s largest private-sector employer. Nobody has been more vocal about the threat to traditional car makers posed by Tesla than VW CEO Herbert Diess, but his power is limited by strong unions and state involvement. The stock has underperformed over the past year as investors have lost confidence in his capacity to reform such an unwieldy company. Improving the profitability of the core VW brand to fund technology investments is a prerequisite to more radical decisions.

Daimler investors were similarly disillusioned when Mr. Källenius took over in 2019. His success in galvanizing support for a new approach, including from unions, shows what can be achieved. That example will be hard for VW to ignore. The North German giant is an even tougher nut to crack, but more might be possible than investors currently think.

WSJ : Scientists Test a New Covid-19 Vaccine Question: Mixing Different Doses

Scientists Test a New Covid-19 Vaccine Question: Mixing Different Doses
Researchers begin tests to study effects of following an initial dose with a booster from another manufacturer

LONDON—As the world keeps adding to its armory of effective vaccines against Covid-19, scientists are starting to ask a new question: What happens if you mix and match?

Researchers are beginning human trials in which volunteers will receive an initial dose of one vaccine and a booster shot from another made by a different manufacturer. The goal is to see if such a strategy—known as heterologous prime-boost vaccination—could produce a more effective immune response against the virus that causes Covid-19 than using two shots of a single vaccine.

Finding ways to bolster the body’s defenses has gained new urgency following the emergence of variants of the virus, whose vulnerability to existing shots isn’t fully understood.

Researchers said the mix-and-match approach, if validated in human trials, will offer another benefit as countries race to inoculate their citizens: It might help ease pressure on vaccine supplies by giving doctors more options when patients are due for a second dose.

“Knowing that you could mix different vaccine types according to supply availability could only accelerate vaccination efforts,” said Helen Fletcher, professor of immunology at the London School of Hygiene and Tropical Medicine.

Researchers at the University of Oxford are enrolling volunteers in an 820-person trial in the U.K. to evaluate a one-two combination of the shot developed by Pfizer Inc. and Germany’s BioNTech BNTX 2.84% SE and the vaccine developed by the University of Oxford and AstraZeneca PLC. The trial, partly funded by the U.K. government, was announced by the U.K. Department of Health and Social Care on Thursday.

AstraZeneca said in December that it plans to test its vaccine with Sputnik V, the vaccine developed in Russia, in a human trial. That trial is expected to start soon in Azerbaijan, the United Arab Emirates and other countries.

Immunologists said the mix-and-match strategy is a tried and tested method of enhancing the body’s immune response to beat back invaders. Heterologous prime-boost vaccination has been turned against other infectious diseases, including ebola, malaria and tuberculosis, and has been used to sharpen the body’s assault against pathogens that cause some cancers and against the tumors themselves.

“I don’t see any downside to heterologous prime-boost,” said Brian Lichty, associate professor of pathology and molecular medicine at McMaster University in Hamilton, Ontario.

By combining shots that can train the immune system to recognize and attack a pathogen in subtly different ways, the body might assemble a bigger or better-equipped army to beat back any invaders it encounters, according to researchers. The combination strategy might avoid the risk with a traditional two-shot vaccine that the immune system repels the vaccine the second time around.

Russia’s Sputnik V follows the mix-and-match idea by using a different viral carrier to train the immune system against Covid-19 in each of its two doses.

The U.K. trial will be the first to test against Covid-19 a mix-and-match approach using different technologies. Pfizer and BioNTech’s vaccine relies on molecular couriers known as messenger RNA to ferry instructions to cells. AstraZeneca’s uses a modified chimpanzee virus as a vector to deliver its payload.

“We don’t have clinical data for such an approach,” said Ugur Sahin, the chief executive of BioNTech. “Therefore, it is important to evaluate the combination of different vaccines within controlled clinical trials before simply implementing this in practice.”

Pfizer said in a statement that it recommends using its vaccine in the manner supported by existing trial data but added that decisions on alternative dosing programs reside with health authorities. AstraZeneca said it is supportive of the trials.

Immunologists said mixes of technologies aren’t unusual. Scientists at the University of Oxford in January reported in a study awaiting review that combining a different RNA-based vaccine and a viral-vector vaccine generated a strong immune response in mice. Messenger RNA vaccines have been tested in conjunction with viral-vector vaccines in types of cancer.

The goal of the U.K. trial is to test whether a mix-and-match approach works as well as or better than the typical practice, said Matthew Snape, associate professor of pediatrics and vaccinology at Oxford and the trial’s leader.

Some participants will get an AstraZeneca shot first and the Pfizer shot second. Others will get the reverse. Control groups will be given the normal two-shot schedule of a single vaccine. The trial will also look at spacing the shots over both four and 12 weeks. Preliminary results are expected in late May or early June, and participants will be monitored closely for side effects. The plan is to enroll more volunteers and test new combinations as additional vaccines gain regulatory approval in the U.K., Prof. Snape said.

Researchers will regularly test participants’ blood for antibodies, infection-fighting T-cells and other markers of immune-system activity. They will compare those on the mixed schedule with those on the regular dosing regime to detect any differences. Prof. Snape said researchers will be able to use those samples to gauge the potential effectiveness of a mix-and-match vaccination against coronavirus variants that might not be as vulnerable to standard shots.

Mary Ramsay, head of immunization at Public Health England, a U.K. health agency, said success in the trial could help physicians facing bottlenecks in vaccine supply. A mix-and-match strategy could help if, for instance, someone couldn’t get a second dose of the original shot or experienced a bad reaction to the first one.

“It really makes the implementation much more simple,” she said.

Mene Pangalos, AstraZeneca’s executive vice president for biopharmaceuticals research and development, said Wednesday at a press briefing: “Ultimately, we want to understand how interchangeable these vaccines are. These are important questions, because ultimately, people will be using different vaccines at different times.”

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • LCI -12.6%, ANGI -7.4%, QCOM -6.3%, QRVO -6.2%, APD -4.6%, COR -4.5%, CTSH -4.2%, UL -4.1%, ABB -3.8%, MUSA -3.3%, NTGR -3%, NOK -3%, CI -3%, GRUB -2.7%, DB -2.3%, GPI -2.3%, BLL -2.2%, LNC -2%, ELF -1.9%, EZPW -1.9%, PENN -1.9%, RDS.A -1.8%, CMI -1.5%, AVB -1.4%, SBH -1%

Other news:

  • HYRE -16.8% (announces the pricing of its previously announced underwritten public offering of 2,200,000 shares of common stock of the company at a price to the public of $11.75/share)
  • DRRX -13.6% (stock offering)
  • ISR -11.1% (stock offering)
  • AQB -10.1% (stock offering)
  • KLDO -10% (prices offering of 5.25 mln shares of common stock at $11.50 per share)
  • AWH -7.6% (stock offering)
  • AGLE -6.8% (CFO to step down)
  • IEA -6% (stock offering)
  • OEG -3.8% (files for $150 mln mixed securities shelf offering)
  • TEN -3.6% (Carl Icahn lowers active stake)
  • ALB -3.6% (prices offering of 8,496,733 shares of its common stock at $153.00 per share)
  • CURI -3.5% (prices offering of 6.5 mln shares of common stock at $13.50 per share)
  • PEB -3% (launches convertible notes offering)
  • QMCO -2.9% (stock offering)
  • QTRX -2.7% (pricing of its previously announced underwritten public offering of 3,571,428 shares of its common stock at a public offering price of $70.00/share)
  • AAL -2.6% (sends letter to employees, will begin issuing Worker Adjustment and Retraining notices covering 13,000 team members Friday)
  • MMYT -2.1% (convertible notes offering)
  • CB -1.4% (authorizes $1 bln increase to share repurchase program)

Analyst comments:

  • SPWR -3.5% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • XRX -2.2% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • FMS -2.1% (downgraded to Neutral from Overweight at JP Morgan)
  • VIAC -2.1% (downgraded to Sell from Hold at Deutsche Bank)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • APPS +17.3%, GOOS +16%, HIMX +11.8%, ALGN +10.7% (also announces commercial availability of Invisalign G8), EBAY +10.1% (also increases dividend by 13%, expands share repurchase plan by $4 bln), MWA +9.4%, QNST +7.8%, SIMO +7.6%, KLIC +7.3%, MXL +7.1%, HI +6.9%, MDP +6.4%, PYPL +6.1% (also co discusses allowing customers to use their crypto balance as a funding source), IAC +5.7%, INOV +5%, SNA +4.9%, ALGT +4.6%, ECHO +4.5%, TBI +4.3%, PH +3.8%, LSPD +3.3%, MET +3%, YUM +2.9%, CTVA +2.7%, BDX +2.6%, BKE +2.4%, ABC +2.3%, VSAT +2.2%, TSE +2.1%, TPR +1.9%, CCMP +1.8%, PLUS +1.7%, SU +1.6%, DGX +1.6%, MSGN +1.6%, TAK +1.5%, THG +1.4%, CSGS +1.4%, YUMC +1.3%, HSY +1.3%, BEP +1.1%, AGCO +1.1%, MAA +1%, CHNG +1%, TW +1%

Other news:

  • AVXL +90.5% (Blackrock increases passive stake to 5.5% (prior 5.2%))
  • THTX +81.8% (FDA has granted fast track designation to TH1902 as a single agent for the treatment of patients with sortilin positive recurrent advanced solid tumors that are refractory to standard therapy)
  • VGAC +13.9% (VG Acquisition Corp. enters into merger agreement with 23andMe)
  • CRVS +13.1% (announces that it has initiated a Phase 3 clinical trial of CPI-006 for the treatment of hospitalized patients with COVID-19)
  • XL +7% (announces strategic partnership with Curbtender for development of all-electric and plug-in hybrid refuse trucks)
  • PHUN +5.5% (files for $100 mln mixed securities shelf offering)
  • ORMP +3% (stock offering)
  • PME +2.5% (Pingtan Marine Enterprise signs a Cooperation Agreement in the field of live broadcast e-commerce)
  • CVAC +2.3% (expands lead RNA cancer program phase 1 trial in advanced melanoma)
  • KPTI +2.2% (partner receives regulatory approval for XPOVIO in Israel)
  • SDC +1.9% (in sympathy with strong earnings from ALGN)
  • AAPL +1.8% (close to finalizing a deal with Hyundai-Kia to make Apple Car autonomous EV, citing sources, according to CNBC)
  • AZUL +1.5% (reports Q4 revenue growth)
  • IMMR +1.4% (files for $250 mln mixed securities shelf offering)
  • CDXC +1.4% (reports that new study results finds nutritional protocol including nicotinamide riboside reduces liver fat and improves liver function)
  • QDEL +1% (opens new manufacturing facility)

Analyst comments:

  • OCGN +13.5% (upgraded to Buy from Neutral at H.C. Wainwright)
  • ALGT +4.6% (upgraded to Buy from Hold at Deutsche Bank)
  • MTCH +3.3% (upgraded to Overweight from Neutral at JP Morgan)
  • APAM +2.8% (upgraded to Outperform from Mkt Perform at Keefe Bruyette)
  • FEYE +2.7% (upgraded to Buy from Neutral at BofA Securities)
  • CDW +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)

9to5 : iPhone 13 camera will have a new lens supplier, says Kuo

Apple analyst Ming-Chi Kuo says that Apple is bringing on board a new lens supplier for the main iPhone 13 camera.

He says that Sunny Optical (2382 HK) successfully passed Apple’s approvals process for iPad lenses, and that the lessons learned from this have put the company on track to be approved to make the main camera lens for the iPhone 13 lineup …

Orders for the seven-element lens for the main camera are currently split between Largan, Yujingguang, and Kantatsu, which supply the lens to LG Innotek for incorporation into the camera module. Sunny Optical is expected to be approved as an additional supplier for the lens.

Apple likes to have multiple suppliers for as many components as possible, for two reasons. First, security of supply: If there’s a problem with one supplier, the others can pick up the slack. Second, cost-management: Multiple suppliers give Apple the negotiating strength to play off one supplier against another.

Recap on iPhone 13 camera expectations
Kuo last year indicated that we can expect three improvements to the ultra-wide camera in the iPhone 13.

First, he expects the aperture to be widened from f/2.4 to f/1.8. All other things being equal, that would let in more than twice as much light, significantly improving the low-light performance. In particular, it should allow for sharper and cleaner night shots.

Second, sources indicate that the number of elements in the lens will be increased from five to six. There are pros and cons to adding elements to a lens, but when a manufacturer takes an existing lens design and adds elements, this is generally done to reduce distortion, which is especially important in wide-angle lenses.

Finally, he expect the ultra-wide lens to get auto-focus for the first time. The current ultra-wide lens is fixed-focus. This might sound surprising, but isn’t generally a huge issue in very wide-angle lenses as they are mostly used for landscapes and cityscapes, where everything in shot is far enough away to be in focus. However, switching to auto-focus will be useful for closer wide-angle shots.

He’s not predicting any notable improvements this year to either the main lens or the telephoto. We are, however, expecting dramatically better reach for the telephoto lens in 2022, thanks to Apple’s expected adoption of a periscope lens design. This could see up to 10x optical zoom.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • AVXL +68.5%, APPS +16.9%, ALGN +10.4%, EBAY +10.1%, MWA +9.4%, SIMO +8.2%, QNST +7.8%, HI +7.2%, MXL +7.1%, PME +6.9%, CDXC +6.8%, SU +5.8%, HIMX +5.7%, KLIC +5.1%, VSTO +5.1%, INOV +5%, PYPL +5%, ECHO +4.5%, MET +4.3%, TBI +4.3%, BDX +3.8%, SNA +3.4%, PHUN +3%, ASX +3%, ABC +2.9%, CLX +2.9%, CTVA +2.7%, TTMI +2.5%, SDC +2.3%, HUBS +2.1%, TSE +2.1%, CCMP +1.8%, AAPL +1.7%, YUMC +1.7%, PLUS +1.7%, AZUL +1.5%, THG +1.4%, AVTR +1.3%, TAK +1.1%, NIO +1%, MAA +1%, CHNG +1%
  • Gapping down:
    • DRRX -13.2%, LCI -12.8%, ISR -12.7%, HYRE -12.2%, ANGI -10.2%, KLDO -10%, IEA -9.7%, AWH -9%, AQB -7.7%, AGLE -6.8%, QCOM -6.7%, QRVO -6.2%, NTGR -6.2%, ALB -5.2%, COR -4.5%, NOK -4.3%, CTSH -4.2%, UL -4.2%, CURI -4.1%, ABB -3.8%, QTRX -3.5%, LNC -3.4%, PEB -3%, QMCO -2.9%, OEG -2.6%, GRUB -2.6%, RDS.A -2.1%, DB -2%, MMYT -1.9%, EZPW -1.9%, BLL -1.8%, AAL -1.7%, AVB -1.7%, APD -1.7%, ELF -1.5%, CB -1.4%, CI -1.2%, MUSA -1%