Caixin News, September 10th (Reporter: Wang Biwei) At 1 a.m. Beijing time today, the 2024 Apple Autumn New Product Launch Event with the theme "It's Glowtime" was held as scheduled. As usual, Apple showcased new versions of the iPhone, Apple Watch, and AirPods at the launch event. Among them, the iPhone 16 as Apple's first AI phone received a lot of attention from the market.

Overall, the main selling point of Apple Intelligence is the iPhone 16 series. Apple CEO Tim Cook also stated at the launch event that the iPhone 16 is "designed for Apple Intelligence". In terms of specific features, Apple Intelligence's features are similar to those announced at the WWDC in June, including text summarization, image search, upgraded voice assistant, and more. In terms of hardware, the upgrades of the iPhone 16 are limited, mainly focusing on processor upgrades, added camera control buttons, screen upgrades, and camera capabilities upgrades.

Currently, professional analysis institutions generally believe that the launch of Apple Intelligence has a limited impact on the sales of the iPhone 16. Counterpoint Research expects that the expected shipment volume of the iPhone 16 in the second half of this year will only increase by 2 to 3 percentage points compared to the same period last year for the iPhone 15. Neil Shah, VP of the organization, told Caixin News that the impact of Apple Intelligence on the iPhone's shipment volume and revenue growth will become more apparent in 2025 and beyond, as the introduction of AI is phased in terms of functionality and region. It is understood that Apple Intelligence cannot currently be used on the Chinese version of the iPhone 16 series.

In terms of suppliers, the change in the Pro series manufacturing pattern is the most significant. It is reported that Luxshare Precision (002475.SZ) has started to undertake more Pro production, and Foxconn's Indian factory is also rumored to join the Pro series production. In addition, with the modest increase in Apple's expected shipments, key Apple suppliers such as Luxshare Precision, Goertek Inc. (002241.SZ), and Lens Technology (300433.SZ) have already shown signs of busyness. Many Apple supply chain companies have seen good performance in the first half of the year, and the implementation of AI on the terminal side in financial reports has become a key factor in improving corporate performance.

Limited hardware upgrades in direct confrontation with Huawei

During this autumn product launch event, Apple brought four new phones: iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max. The base version is available in five colors: cyan, dark blue, pink, white, and black; the Pro series comes in four colors: titanium, white titanium, black titanium, and desert titanium. According to information from the Apple official website, the prices of the entire iPhone 16 series are the same as the previous generation with the same amount of memory.

In terms of appearance, the biggest changes in the 16 series are the screen size and the camera button.

The screen sizes of iPhone 16 and Plus are the same as the previous models, 6.1 and 6.7 inches respectively; iPhone 16 Pro is upgraded from 6.1 inches to 6.3 inches, and iPhone 16 Pro Max is upgraded from 6.7 inches to 6.9 inches. This is also one of the important reasons why the panel shipment of the iPhone 16 series was 20% higher than that of the iPhone 15 series in June and July of 2023, as reported by Counterpoint Research.

In addition, the iPhone 16 series has added a "camera control" button, which allows users to take photos, videos, and adjust camera parameters.

In terms of built-in features, Apple has mainly upgraded the processor and camera functions.

iPhone 16 and Plus are equipped with the A18 chip, with a 3nm process. The CPU performance has increased by 30% compared to iPhone 15, and the GPU performance has increased by 40%; the Pro models have been upgraded to the A18 Pro chip, which is also a 3nm process. The CPU performance has increased by 15% compared to the A17 Pro, and the GPU performance has increased by 20%.

In terms of photography, the iPhone 16 Pro series is equipped with a 48 million pixel ultra-wide camera, a 48 million pixel fusion camera, and a 5x telephoto lens. Thanks to the sensor upgrade, these models can support 4K 120fps video recording.

As for the highly anticipated "Apple Intelligence", Cook said at the press conference: "I am very excited about the new generation iPhone, it is completely designed for Apple Intelligence and various breakthrough features."

According to the introduction, the entire iPhone 16 series supports Apple Intelligence, which includes communication expression (such as organizing text with Apple Intelligence, customizing emojis, etc.), memory recall (such as searching for pictures, videos, etc. using keywords), task arrangement (such as summarizing email highlights, etc.), new Siri (increased usage scenarios for Siri), which is similar to the content announced at WWDC in June.

However, the use of Apple Intelligence is heavily restricted in the short term. According to official information, Apple Intelligence will start testing the English version in the United States in October; Chinese, French, Japanese, and Spanish versions will be launched next year, but the specific timing is not yet determined. On the Apple website's purchase interface, Apple also reminds that currently, iPhone models purchased in mainland China cannot use Apple Intelligence.

It is worth mentioning that at 14:30 this afternoon, Apple's old rival Huawei will also release a new phone. The market is also paying close attention to this "peak showdown".

According to the public information on Huawei's official online store and Weibo platform, the first foldable phone launched by Huawei is the Huawei Mate XT. Starting from September 7th, Huawei has opened pre-orders for this product, and as of 9:00 p.m. on September 9th, the number of pre-orders for this product has exceeded 3 million.

However, Ethan Qi, the Deputy Director of Research at Counterpoint, told Caixin that Huawei Mate XT does not target the same users as the Mate 16 series, so its impact on the sales of the Mate 16 series is very limited. He believes that the significance of Mate XT is mainly to consolidate Huawei's technological leadership in the field of foldable screens and help Huawei accumulate experience in developing more complex foldable smart phones.

The performance of the Apple supply chain has collectively improved, and the pattern of Pro manufacturing has changed.

In June of this year, when Apple announced the launch of Apple Smart, the market expected Apple Smart to bring about a "replacement wave" and inject vitality into the consumer electronics market. However, according to feedback from various parties, the impact of Apple Smart on sales is expected to be very limited.

Ryan Reith, Director of Research at IDC, said that consumers will pay attention to Apple Smart, but the market already has GPT and various other solutions, and consumers can use AI on their current devices. Therefore, Apple Smart is difficult to directly drive new consumer purchases.

However, the iPhone 16 series has other positive factors to promote it. Neil Shah told Caixin that since Apple's last super cycle of iPhone revenue was in 2021, there will be a considerable number of consumers using iPhone 12 and iPhone 13, and these consumers may decide to upgrade and drive revenue growth.

IDC predicts that the smartphone market is expected to grow by 6% this year, mainly driven by 7% growth in Android and approximately 1% growth in Apple. At the same time, it is estimated that Apple's growth next year will be 4%, while Android's growth will be 2%.

From the perspective of domestic suppliers, the overall shipment volume of the new iPhone has indeed increased as expected to some extent, and the industry chain has benefited to a certain extent. Lens Technology also emphasized the 'AI landing at the end side as an important driver of the company's performance growth' in its first half financial report.

Since July of this year, related factories have shown a busy scene of recruiting workers. Luxshare Precision, Foxconn, Lens Technology, and Berne Optics, among other leading companies in the supply chain, have been actively recruiting at high prices. A labor recruiter told the Securities Times reporter that the number of recruits and wages at Foxconn are higher than last year. However, on the evening of September 9, a labor intermediary told reporters that the peak recruitment season is coming to an end and the demand has decreased.

It is worth mentioning that in terms of the overall production pattern of Apple's smartphone production, the biggest change in the 16 series is the production of the Pro series.

Firstly, there is a change in suppliers. Previously, Luxshare Precision mainly focused on the production of basic iPhone models. Starting from the 15 series, Luxshare Precision began to undertake the production of the Pro series. In the production of the 16 series, Luxshare Precision's proportion is even higher. Recently, a source from the supply chain confirmed to the Securities Times reporter the news that Luxshare Precision successfully secured the iPhone 16 Pro Max NPI, which was previously disclosed by well-known Apple analyst Ming-Chi Kuo; Furthermore, on September 9, Ming-Chi Kuo also stated that Foxconn and Luxshare's iPhone 16 series order production ratio is 55%-60% and 40%-45% respectively.

In addition, there has been a change in the production location. Previously, the Pro series of Apple's products have always been produced in China. However, a recent report by Bloomberg revealed that Foxconn's factory in Tamil Nadu will begin production of the Pro and Pro Max models. Despite the slow progress of iPhone production in India, which has been quite controversial, Apple's determination to have multiple sources for its products remains clear.

Under such circumstances, the market has strong concerns about whether Apple will shift its supply chain. Eric Chiou, an analyst at TrendForce, told the Securities Times that in the long run, the shift of the supply chain is inevitable and will certainly have a certain impact on the market share of domestic suppliers. However, in the short term, the changes in the supply chain will not be too significant, as the migration process will be gradual and will need to consider various supporting factors. In addition, against the backdrop of multiple deployments, some supply chain manufacturers may establish new centers according to the needs of the brands, thus ensuring the stability of market share.