The Apple suppliers set to pop on iPhone 16 series launch: BofA
Tech giant Apple is expected to unveil its new iPhone later this year, and Bank of America has identified several stocks set to gain from the smartphone’s evolution. “Following stabilized smartphone demand, we turn positive on Apple supply chain, as we expect material design changes and AI function to drive a more sustainable upcycle in the next 2-3 years,” the investment bank’s analysts wrote in a June 26 research note. They expect iPhone 16 series stocking of between 90 and 100 million units in the second half of this year — just higher than last year’s 90 million units. There has been much speculation about the next iPhone’s functionality and looks. Renowned Apple analyst Ming-Chi Kuo is expecting a bigger screen and periscope camera to feature on the iPhone 16 Pro, while analyst Ross Young also said he’s expecting bigger screens. Drawing reference to past cycles, the BofA analysts noted that stocks on Apple’s supply chain “generally outperformed before product launch,” while their performance post-launch “depends on product spec/pricing vs consensus, shipment and also expectations on next year’s new iPhone.” Here are some of BoA’s top buy-rated stocks to play as the iPhone evolves: Hon Hai Precision Taiwan’s Hon Hai Precision Industry — the world’s largest contract electronics manufacturer — is among the names on BofA’s list. The company also goes by the name of Foxconn and assembles consumer products like Apple’s iPhones. “A solid iPhone replacement cycle and spec upgrade should help HH’s better sales/earnings in 2025-26,” the investment bank’s analysts wrote. Shares in Hon Hai are traded on the Taiwan Stock Exchange and in the U.S. as an American Depository Receipt (ADR). Its shares are on an uptrend, gaining nearly 116% year-to-date. BofA hiked its price target on the stock to 260 New Taiwan dollars ($7.98), from 200 New Taiwan dollars, giving it around 15.3% potential upside. Foxconn Industrial Internet Foxconn subsidiary Foxconn Industrial Internet , which manufactures iPhone cases, is also among BofA’s favorites. The bank expects the China-based design and manufacturing giant to see strong margins as demand for its casings increases in tandem with better iPhone shipment cycles between 2025 and 2026. “We lift Foxconn Industrial Internet (FII)’s 2024-26E earnings by 2-6% on potentially better iPhone casing sales and strong AI server contribution,” the analysts wrote. Foxconn has a dual listing on the Shanghai and Taiwan Stock Exchanges. Its shares are also traded as an ADR in the U.S. Its Shanghai-listed shares are up 91.8% year-to-date. BofA has a 12-month price target of 33 Chinese yuan ($4.54) on the stock, giving it around 13.8% potential upside. Luxshare Precision BofA is bullish on Chinese electronics manufacturer Luxshare , “a key beneficiary” of a stronger iPhone cycle. This is “thanks to its high exposure in various iPhone components (acoustic, haptic, wireless charging, cable connector, top/back module, LCP antenna, etc) as well as ongoing share gain at iPhone assembly (26%/30% share in 2024/25E vs 21% in 2023),” the bank’s analysts wrote. With this, they expect Luxshare’s earnings to increase by 3% between 2025 and 2026 on the back of “potentially better consumer business and ongoing share gain at iPhone assembly.” Shares in Luxshare are listed on the Shenzhen Stock Exchange and are also included in the KraneShares CICC China 5G & Semiconductor Index ETF (6.2% weight). BofA raised its price target on the stock from 39 to 46 Chinese yuan, giving it around 11.1% potential upside. BYD Electronic Also on BofA’s radar is BYD Electronic which it says is set to gain from the consolidation of its iPhone casing business. “We expect BYDE’s casing profitability to gradually improve on better operation efficiency (higher automation rate, improving yield),” the analysts wrote. They have lifted the company’s 2025-2026 earnings expectations by 2% to “reflect potentially better iPhone volume, robust auto expansion as well as rising AI-related contribution (server, robot).” Shares in BYD Electronic, which is majority-owned by automotive giant BYD, are listed on the Hong Kong Exchange and as an ADR. BofA has a price target of 42 Hong Kong dollars ($5.38) on the stock, giving it 25.3% potential upside. — CNBC’s Michael Bloom contributed to this report.
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