UOB Kay Hian: Smartphone supply chain diverging, bullish on Apple supply chain stocks and AI hardware makers

UOB Kay Hian stated in a report that in this earnings season, suppliers with exposure to Apple and high-end segments are relatively more resilient, while low-end and mid-range Android phones have been severely hit by rising component prices. The brokerage expects the pressure to persist until 2027 and prefers Apple supply chain stocks over the Android supply chain, as their shipments, profit margins and average selling prices are more resilient. It is also bullish on manufacturers that have effectively diversified into AI devices and AI servers, believing this can provide a meaningful buffer. The brokerage maintains an "Overweight" rating on the sector and favors AI hardware over the handset supply chain. It noted that Sunny Optical, Q Technology and AAC Technologies all expect high double-digit growth in related businesses in 2026, while AI infrastructure components are expected to ramp up starting in the second half of this year.