According to a recent report from Morgan Stanley, increased shipments of Apple’s iPhones are expected to be a key driver for the supply chain in the coming years. The bank notes that consumers have been holding onto their iPhones for longer periods of time, but this trend is likely to change with the introduction of Apple Intelligence, a generative artificial intelligence feature that is set to drive new iPhone upgrades.
The bank estimates that 215 million iPhones will be shipped in 2024, with the number increasing by 9% to 235 million units in 2025. Key beneficiaries in the Asian supply chain are expected to include companies such as Hon Hai, Largan, Luxshare, Genius, AAC, and Foxconn Industrial Internet, all of which have significant revenue exposure to Apple.
Hon Hai, a Taiwan-listed company, is particularly favored by Morgan Stanley for its dual growth drivers of iPhone assembly and AI servers. The bank predicts that Hon Hai will retain its iPhone assembly share at around 63%, with solid revenue growth expected in the coming years.
Luxshare, another key player in the supply chain, is expected to benefit from Apple’s focus on component upgrades for the iPhone’s AI features. With approximately 70-80% of its total revenue coming from Apple, Luxshare is seen as a good proxy to play the upcycle of Apple hardware devices.
Foxconn Industrial Internet is also expected to see growth, with the company supplying titanium metal casings for the upcoming iPhone 16 Pro and Pro Max models. Additionally, its progress in AI data center infrastructure is predicted to drive up profits in the coming years.
Largan, despite reporting lower-than-expected revenue in the first quarter, is expected to see a more promising outlook in the second half of 2024. The introduction of larger-sized and high-end new products is expected to boost growth for the company.
Genius is highlighted for its potential breakthrough in the periscope high-end lens segment, which could improve its competitiveness in the market. Lastly, AAC is expected to see recovery drivers unfold this year, with continual improvement in yield and margin for wafer level glass technology.
In conclusion, the supply chain for Apple’s iPhones is expected to see significant growth in the coming years, driven by increased shipments and key innovations such as Apple Intelligence. Companies with strong ties to Apple, such as Hon Hai, Luxshare, and Foxconn Industrial Internet, are poised to benefit from this growth.
My Opinion:
The expected increase in iPhone shipments and the introduction of Apple Intelligence are likely to drive growth in the supply chain and benefit companies heavily tied to Apple. It’s clear that consumer demand for new iPhones is still strong, and innovations like AI features are likely to drive even more upgrades in the future. As technology continues to evolve, companies in the supply chain will need to adapt and capitalize on these trends to remain competitive in the market.