Analysts at Morgan Stanley have said foldable handsets are the “next exciting upgrade in smartphone displays” and named several stocks set to benefit. The bank expects global shipments of foldable smartphones to reach a compound annual growth rate (CAGR) of 45% between 2022 and 2025. “We regard foldable displays as the next big thing for smartphone displays,” Morgan Stanley’s analysts led by Derrick Yang wrote in a research note dated August 30. Samsung — which launched two folding handsets in July — is rated overweight by the bank (Morgan Stanley’s overweight rating corresponds to a buy recommendation). “Samsung has the strongest balance sheet among industry players by a significant margin, which allows it to heavily invest in R & D,” the analysts wrote. The bank is also overweight-rated on Chinese manufacturer Xiaomi , which launched its Mix Fold 3 phone last month . The handset could help the company “establish a high-end brand image,” the bank said, noting its new display technology which can make the handset last longer “and improve user experience.” U.S. company Corning , a Samsung supplier that makes damage-resistant Gorilla Glass, is also rated overweight by Morgan Stanley. “Gorilla Glass has expanded beyond smartphones (i.e. to wearables, tablets, laptops) and has been designed into more than 8bn devices across more than 45 brands,” the analysts wrote. A folding iPhone? While the bank is overweight Apple , it said it will be a “few years” until it launches a foldable handset. “Apple has adopted new technologies later than peers … but eventually comes to market with a superior product. We view Apple’s entrance into foldable smartphones similarly,” Morgan Stanley said. While a foldable iPhone “would be a catalyst to drive upgrades,” the price of the handset might hamper sales, the bank added. “We think foldable displays, mostly in either book form or clamshell form … could be the next major advancement in the smartphone space, since they can offer a more immersive viewing experience for entertainment, better multi-tasking setup for productivity, and a more compact form for portability,” the analysts added. – CNBC’s Michael Bloom contributed to this report.
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