Will Apple Inc. Shrink the Notch in the 2018 iPhone X Models?

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Analysts with Barclays claim that Apple's (NASDAQ: AAPL) upcoming iPhone models, which should include two premium models with advanced organic light-emitting diode (OLED) displays and a cheaper one with a lower-cost liquid crystal display (LCD), will include an enhanced version of the depth-sensing camera (branded "TrueDepth") that's part of the current iPhone X.

The changes aren't expected to be significant, the analysts say, because of the "complexity and multiple years spent developing the current generation of module," as well as "multi-year" component supply commitments.

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Nevertheless, the analysts say that they "expect the sensor to evolve slightly, potentially reducing in size (i.e., smaller notch) and improving in specificity."

Although I do think the functionality of the TrueDepth camera will improve in the coming iPhone models, it seems unlikely that the so-called "notch" in the display -- a cutout in the iPhone X's screen to allow the TrueDepth camera to work -- will shrink in the upcoming iPhone models. Here's why.

Too big a change for a single generation

The TrueDepth camera, according to Apple, includes many different components, including an infrared camera, flood illuminator, proximity sensor, ambient light sensor, speaker, microphone, camera sensor, and dot projector.

As the image above shows, there's very little wasted space in the so-called notch -- it's just large enough to accommodate the required components.

For Apple to significantly shrink the notch, it would need to reduce the physical footprints of many of these components, or it would need to consolidate some of these components into a single part (the latter is something that's rumored to be in the works for the 2019 iPhone models).

My guess is that shrinking each of these components while keeping their functionality the same would be difficult to achieve in just a single year (if it's possible at all), and consolidating multiple components into one part could be too difficult to achieve in just a year.

Instead, it seems more likely that for the next-generation iPhone models, Apple will keep most of the components of the TrueDepth camera module unchanged save for the front camera sensors, which I expect will get an upgrade for competitive reasons.

One more thing

Another thing to keep in mind is that Apple doesn't really have a lot of pressure to shrink the size of the notch in this year's iPhone X models. Apple, of course, does need to continually improve the aesthetics of its devices at a regular pace. But considering that the current iPhone X design is limited to a single ultrapremium model, Apple should get the same sort of market benefit it would typically see with a design overhaul simply by bringing the iPhone X's design to a more affordable price point.

Apple is expected to do just that later this year when it introduces a lower-cost iPhone with a 6.1-inch LCD. The phone is expected not to be as flashy in some ways as the current iPhone X model (aluminum frame instead of stainless steel, less memory, no 3D Touch support), but it's still believed to incorporate the same basic design language and style as the iPhone X.

On top of that, Apple is expected to introduce a larger version of the successor to the iPhone X, which I expect will be marketed as the iPhone X Plus. This device, too, could deliver the market benefits traditionally associated with a form-factor change since that's what it has, for all intents and purposes (even if it's just a scaled-up version of a preexisting form factor).

With all of the changes that Apple will be making to its upcoming iPhone lineup, rushing to shrink the size of the notch just isn't something that should be a top priority for the coming iPhone models -- it's not yet needed.

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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.