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1 Big Upgrade That Could Come to Apple Inc.'s 2018 iPhones

Back on Sept. 5, DigiTimes said that Apple (NASDAQ: AAPL) had "booked up the production capacity" at lens module maker Largan Precision for "above 12-megapixel lens modules" in support of next year's iPhones.

Image source: Apple.

Apple's iPhones have incorporated rear-facing cameras with 12-megapixel sensors since the introduction of the iPhone 6s in 2015. Since then, Apple has introduced updated rear-facing camera subsystems that deliver improved image quality by many means -- both in the camera hardware and as well as in its image processing algorithms -- but it hasn't upgraded the pixel count of the sensors that it uses.

If the DigiTimes report is to be believed, Apple may be planning to finally increase the resolution of the rear-facing cameras with its 2018 iPhones.

More room, bigger sensor

Digital Trends' Les Shu explained a while back that the size of a camera's sensor is far more important a factor to image quality than the advertised resolution.

Shu says that larger sensors can let in more light than smaller sensors, which means that the former can produce images with a wider dynamic range and less noise than the latter.

In a previous column, I argued that Apple's expected shift toward pricier, larger-screen iPhones next year will allow it to use larger camera modules that, in turn, can house larger image sensors as well as more advanced optics.

Indeed, the fact that Apple has shipped phones using the same basic form factor as the iPhone 6 for four generations has clearly been limiting. A TechInsights tear-down of the iPhone 8 Plus (which uses the same sensor for its rear-facing wide angle lens as the iPhone 8 does) reveals that the sensor found inside of the iPhone 8's rear-facing camera measured in at 32.8 square millimeters -- a minuscule bump in size from the 32.3 square millimeter sensor found in the iPhone 7.

The fact that Apple and its image sensor supplier Sony (NYSE: SNE) have managed to dramatically improve image quality over the last four product generations while being forced to work with the space constraints of the iPhone 6's form factor is a testament to the excellent engineering by both Apple and Sony.

However, with what could be freedom to dramatically increase camera module and therefore sensor sizes in the next iPhone, Apple could conceivably increase both pixel size as well as pixel resolution in next year's iPhones.

How this could help Apple's business

In terms of resolution increase, I doubt that Apple will go crazy, since even with the added freedom to increase sensor size, Apple still needs to strike a good balance between pixel size and resolution.

My guess is that Apple will upgrade the rear-facing cameras to either a 13-megapixel or 14.3-megapixel sensor -- enough of an upgrade to be marketable as an upgrade while still leaving room for a pixel size increase.

Now, it might seem that a slight resolution upgrade that could take away from increasing the pixel size doesn't make sense, but here's the thing: Apple must market its iPhones to the average consumer, and the average consumer isn't going to dig into the details.

But, to the average consumer, bigger numbers are often better.

So, in my view, Apple will still work to improve the quality of the sensor and the optics in next year's iPhones, but it'll also bump the resolution up a bit so that it has an easier time marketing the camera improvements to the average smartphone buyer. 

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Ashraf Eassa has no position in any of the stocks mentioned. 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.