Huaxin Securities has released a research report indicating that the sales of the iPhone 17 series have grown 14% within the first 10 days post-launch in China and the United States, significantly surpassing the performance of the iPhone 16 series in the same period. In China, the base model iPhone 17 has become the main driver of growth, with sales nearly doubling compared to its predecessor. It offers exceptional value for money with a stronger chip, superior display, larger storage, and upgraded front camera at the same price point, leading to strong consumer demand. In the U.S. market, the iPhone 17 Pro Max has shown the highest demand, with carrier subsidies increasing by 10%, enhancing high-end phone sales. The eSIM-only iPhone Air is expected to slightly outperform the iPhone 16 Plus and is projected to launch in China by the end of October.
China’s supply chain remains dominant, gradually shifting towards higher value-added segments. The production and assembly of the iPhone 17 series is structured around dual centers in China and India, with China accounting for 84% and India for 14%. However, the comprehensive and mature nature of China's supply chain remains irreplaceable. In Apple's 2024 supply chain list, 92 out of 187 core enterprises are from China, surpassing 50%. Mainland China is a pivotal source for key components of the iPhone 17 series, Mac, and Apple Watch. Notably, the share of Chinese suppliers in critical areas of the supply chain is gradually increasing.
Specifically, in precision manufacturing and OEM, Luxshare Precision is responsible for the entire iPhone 17 series production, serving as a super platform from component manufacturing to complete assembly, deeply supplying modules for wireless charging, acoustic devices, and linear motors. Foxconn Industrial Internet handles the assembly of traditional iPhone models and upcoming foldable models, providing precision structural components for the iPhone 17. SAITEN Group supplies Apple with automated testing and assembly equipment.
In terms of key components, BOE supplies OLED displays, while Lingyi ZhiZao provides thermal solutions for the iPhone 17 series, including heat pipes, air-cooling modules, thermal pads, and thermal adhesives, as well as assemblies and components for products like Mac, iPad, and AirPods. Lens Technology supplies front and back cover glass and high thermal conductivity aluminum alloy frames, with its UTG products expected to benefit from future Apple foldable devices. Pegatron provides FPC, HDI, and SLP, benefiting from the increased PCB usage due to iPhone AI advancements. GoerTek supplies acoustic modules like speakers and microphones, and Crystal Optoelectronics provides optical filters for cameras and diffractive optical components for Face ID functionality.
Looking ahead, Apple is expected to launch a new foldable device in 2026, featuring a crease-free display and a titanium body, equipped with a 5.5-inch external display and a 7.8-inch internal display, powered by the A20 series processor, and integrating four cameras, utilizing a titanium-stainless steel combination along with liquid metal, with a UTG glass cover that replaces Face ID with a side-button integrated Touch ID design. The new device is set to begin trial production from late Q3 to early Q4 of 2025, entering large-scale stock preparation by Q2 of 2026. In addition, Apple plans to release an AI glasses product at the end of 2026, competing with Meta's Ray-Ban smart glasses, featuring a built-in camera, speakers, and microphones, and powered by Apple's newly developed chip. These glasses will support environmental awareness and image recognition, further expanding Apple’s AI ecosystem.
With the iPhone 17 series sales exceeding expectations and Apple slated to launch more products in 2026-2027, the supply chain is likely to enter a new prosperity cycle, with mainland China's relevant supply chains expected to continue benefiting, maintaining a "recommend" rating in the consumer electronics sector. Stakeholders are advised to focus on: 1) Manufacturing and OEM: Luxshare Precision (002475.SZ), Foxconn Industrial Internet (601138.SH); 2) Thermal modules: Suzhou Tianmai (301626.SZ), Zhongshi Technology (300684.SZ); 3) Hinges: Yian Technology (300328.SZ), Dongmu Co., Ltd. (600114.SH), Tonglian Precision (688210.SH); 4) Structural parts: Lingyi ZhiZao (002600.SZ), Changying Precision (300115.SZ); 5) Mid-frames and glass covers: Lens Technology (300433.SZ); 6) Optical modules: Crystal Optoelectronics (002273.SZ), Lante Optical (688127.SH), SUNNY OPTICAL (02382), and Gao Wei Electronics (01415); 7) PCBs: Pegatron (002938.SZ), Dongshan Precision (002384.SZ).
Risk warnings include underperformance of iPhone 17 series shipments, slower-than-expected upgrades for new models, and potential U.S.-China trade tensions.