MLCC

**August Taiwan IT: Apple Value Chain on the Rise**

**● Notable Growth in the iPhone Value Chain**

- In July, Taiwan's semiconductor and electronics companies showed generally positive sales growth. One of the key highlights from the July sales data is the strong performance of companies within the iPhone value chain.

- The continuous monthly sales increase among Apple value chain companies since the beginning of the year raises expectations for the success of the iPhone 16 in the second half of the year. Our estimate for this year’s iPhone 16 shipments is 73.8 million units, a 6.2% increase compared to the iPhone 15’s 69.5 million units (based on TechInsights data). The upcoming Apple Intelligence, set to be unveiled in October, is expected to attract Android users to the iOS ecosystem and drive replacement demand among legacy iPhone users with its distinct differentiating features.

- The sales trend for Apple value chain companies is expected to continue into the second half of the year, following the momentum from the first half.

**● Semiconductors: ODM Performance Supported by Strong Server Demand**

- TSMC's July sales increased by 24% compared to the previous month and by 45% year-on-year, driven by strong demand for Apple's new products and AI-related demand.

- TSMC’s 3nm production line, which primarily serves Apple, has been operating at 100% capacity since the end of the first quarter.

- Aspeed and Wiwynn, considered proxies for server demand, saw their July results rise by 159% and 76% year-on-year, respectively.

- The increase in server builds, particularly around AI servers, is contributing to the sales growth, indicating a clear recovery in demand.

**● Electronics: Overall Growth, with iPhone Value Chain Standing Out**

- The entire electronics sector, including PCB and MLCC, is showing robust sales growth.

- Yageo, in its Q2 earnings report, forecasted that MLCC demand in the second half would follow a similar trend to the first half, with utilization rates expected to exceed those of the first half. This provides an insight into the current MLCC market conditions.

- The monthly sales trend of the Taiwan iPhone value chain suggests a significant initial shipment volume for the iPhone 16 compared to its predecessor. The iPhone 16, differentiated by Apple Intelligence, is expected to attract Android users and stimulate replacement demand among legacy iPhone users, leading to higher shipments compared to the previous model.