Citi: iPhone production remains strong in the third quarter, looking favorably on upgraded beneficiaries such as AAC Technologies and Sunny Optical.

Citigroup published a research report stating that Apple's performance for the quarter ending in June indicates that the supply constraints for system-on-chip components will significantly increase, and the supply chain flexibility for the September quarter is limited. Memory costs are expected to rise further, but the costs of some non-memory components will decrease. The bank's latest production plan for the iPhone shows that production in the third quarter remains strong, with a year-on-year increase of 22%; production volume for the iPhone 18 in the second half of the year is expected to reach 81 million units, lower than the previous expectation of 84 million units, of which the foldable model is projected to reach 7.5 million units. Key upgrades for the iPhone 18 include: foldable phones driving ultra-thin flexible glass, hinges, titanium metal casings, and upgraded VC thermal dissipation; the Pro and Pro Max main lenses will feature variable apertures. Key beneficiaries among suppliers include: Luxshare Precision gaining market share; Lens Technology providing foldable UTG; AAC Technologies supplying VC thermal dissipation; and Sunny Optical receiving increased lens shares and actuator orders. Hon Hai is the exclusive EMS supplier for the iPhone 18; Pegatron and Tata only supply about 7% of the Pro Max.