Huaxin Securities: iPhone 17 series sales exceed expectations, Guolian is expected to usher in a boom cycle.

Huaxin Securities released a research report stating that the sales of the iPhone 17 series in China and the United States increased by 14% compared to the iPhone 16 series in the first 10 days after its launch, significantly outperforming its predecessors. In the Chinese market, the base model iPhone 17 became the main driver of growth, with sales almost doubling compared to the previous generation. It offers high cost-performance with stronger chips, better displays, larger storage, and upgraded front cameras at the same price, attracting consumers. In addition, it is expected that Apple will release a new folding phone in 2026. With the sales of the iPhone 17 series exceeding expectations and Apple releasing more new products in 2026-2027, the supply chain is expected to enter a new cycle of prosperity, with Chinese mainland supply chains expected to continue benefiting. Huaxin Securities' main points are as follows: iPhone 17 series sales exceed expectations, strong demand in the Chinese and American markets The sales of the iPhone 17 series in China and the United States increased by 14% compared to the iPhone 16 series in the first 10 days after its launch, significantly outperforming its predecessors. In the Chinese market, the base model iPhone 17 became the main driver of growth, with sales almost doubling compared to the previous generation, offering high cost-performance and attracting consumers with stronger chips, better displays, larger storage, and upgraded front cameras at the same price. In the US market, demand for the iPhone 17 Pro Max was strongest, with a 10% increase in operator subsidies driving sales of high-end phones. The iPhone Air, which only supports eSIM, performed slightly better than the iPhone 16 Plus and is expected to launch in China at the end of October. China's supply chain still dominates, gradually shifting towards high-value links The production and assembly of the iPhone 17 series adopt a dual-center layout in China and India, with China accounting for 84% and India accounting for 14%. However, the complete and mature supply chain in China is difficult to replace. Among the 187 core companies on Apple's 2024 supply chain list, 92 are from China, accounting for more than 50%. Mainland China is a core component supplier for the iPhone 17 series, Mac, Apple Watch, and other products. It is worth noting that Chinese suppliers are gradually increasing their share in the core links of the supply chain. Specifically, in precision manufacturing and OEM, Luxshare Precision Industry undertakes the OEM of the entire iPhone 17 series, providing wireless charging, acoustic devices, linear motors, and other modules. Foxconn Industrial Internet is responsible for the assembly of traditional iPhone models and future foldable screen models, providing precise structural components for the iPhone 17. Suzhou Secote Precision Electronic provides Apple with automated testing equipment, automated assembly equipment, and other products. In terms of key components, BOE supplies OLED screens; Lingyi Itech provides thermal solutions for the iPhone 17 series, including heat pipes, air cooling modules, thermal pads, thermal conductive adhesives, and other components, as well as module components and components for Mac, iPad, Airpods, etc.; Lens Technology provides front and back glass covers and high conductivity aluminum alloy middle frames, with the company's UTG products expected to benefit from future Apple folding phones; Avary Holding provides FPC, HDI, and SLP, benefiting from the increase in single-machine PCB usage brought about by the AI of the iPhone; Goertek Inc. provides speaker, microphone, and other acoustic modules; Zhejiang Crystal-optech provides filters for camera lenses and diffractive optical elements to achieve Face ID functionality. New products such as folding phones and AI glasses will be released in 2026, and Apple is expected to enter a new cycle of prosperity Looking ahead, it is expected that Apple will release a new folding phone in 2026. This folding screen phone will be equipped with a seamless display screen and a titanium body, with a 5.5-inch outer screen and a 7.8-inch inner screen, equipped with an A20 series processor, four cameras, a combination of titanium alloy and stainless steel, liquid metal, and UTG glass cover plate. It will eliminate Face ID and use side buttons integrated with Touch ID design. The new product is expected to start trial production at the end of Q3 2025 and enter mass production from Q2 2026. In addition, Apple plans to launch AI glasses at the end of 2026 to compete with Meta Ray-Ban smart glasses. These AI glasses will be equipped with cameras, speakers, and microphones, and will be powered by Apple's new self-developed chip. These glasses will support functions such as environmental perception and image recognition, further expanding Apple's AI ecosystem. With the sales of the iPhone 17 series exceeding expectations and Apple releasing more new products in 2026-2027, the supply chain is expected to enter a new cycle of prosperity, and Chinese mainland related supply chains are expected to continue benefiting, maintaining a "recommended" rating for the consumer electronics industry. Target recommendations It is recommended to continue to pay attention to: 1) Manufacturing and OEM: Luxshare Precision Industry (002475.SZ), Foxconn Industrial Internet (601138.SH); 2) Heat dissipation modules: Suzhou Tianmai Thermal Technology (301626.SZ), Jones Tech Plc (300684.SZ); 3) Hinges: Dongguan Eontec (300328.SZ), NBTM New Materials Group (600114.SH), Shenzhen Pacific Union Precision Manufacturing (688210.SH); 4) Structural components: Lingyi Itech (002600.SZ), Shenzhen Everwin Precision Technology (300115.SZ); 5) Middle frames and glass covers: Lens Technology (300433.SZ); 6) Optical modules: Zhejiang Crystal-optech (002273.SZ), Zhejiang Lante Optics (688127.SH), Sunway Optoelectronics (02382), COWELL (01415); 7) PCB: Avary Holding (002938.SZ), Suzhou Dongshan Precision Manufacturing (002384.SZ), etc. Risk warning Shipment volume of the iPhone 17 series is lower than expected; Iterative upgrades of new models are lower than expected; US-China trade frictions, etc.