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2026-11-06 15:26:15 JPMorgan released a report stating that global smartphone shipments plunged 22% YoY in 3Q26. The bank believes weak demand may persist through 4Q26 and 2027 amid continued inflation in memory costs. However, supply chain divergence is intensifying, with resilient demand for high-end models from Apple Inc. (AAPL.US) contrasting with shipment and margin pressure faced by Android vendors. Regarding market concerns over potential order cuts for the iPhone 18 Pro/Pro Max, the bank's supply chain checks indicated that overall production plans for 2H26 remain broadly unchanged, implying more than 10% YoY shipment growth versus the iPhone 17 premium models. The bank believes the recent share price correction overlooks the resilience of Apple demand, while companies with higher exposure to Apple's premium models or more diversified product mixes are better positioned to withstand downside risks. The bank noted that IDC data showed global smartphone shipments declined 22% YoY in 3Q26, accelerating from an approximately 6% YoY decline in 1H26. Data from the China Academy of Information and Communications Technology also showed China's smartphone shipments fell around 31% YoY in 3Q26, compared with a 3% YoY decline in 1H26. The bank believes the sharp deterioration signals continued weakness in fourth-quarter shipments and remains cautious on global demand in 2027, as elevated memory prices increase bill-of-materials costs and weaken consumer affordability, particularly for low-end smartphones. For the Android supply chain, the bank expects additional downside risks to shipments in the fourth quarter, while intensified price competition and rising customer price sensitivity will further pressure profit margins. These headwinds may continue into 2027. Within its coverage universe, the bank is more positive on LUXSHARE PRECISION (002475.SZ) (rated Overweight with a TP of RMB88), COWELL (01415.HK), and AAC TECH (02018.HK), while remaining cautious on SUNNY OPTICAL (02382.HK) and GOERTEK (002241.SZ). The bank favors COWELL for its high exposure to shipment growth of premium iPhone models in 2H26, assigning an Overweight rating and a TP of HKD48. It also resumed coverage on AAC TECH with an Overweight rating and a TP of HKD58, believing new projects in thermal management and precision components can support earnings growth and valuation re-rating. Coverage on SUNNY OPTICAL was also resumed with a Neutral rating and a TP of HKD68, as the bank believes the market has reasonably reflected lens premiumization and rapid growth in the broader Internet of Things sector. The bank also assigned an Overweight rating and a TP of HKD11 to LINGYI ITECH (01688.HK). (da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |