Apple's new round of "design transformation": How will it reshape the valuation of the Apple supply chain?

Apple is expected to continuously launch new products with major breakthroughs in design over the next few years, a move regarded as a new catalyst for reshaping its supply chain valuations. According to a recent Goldman Sachs report, starting with the highly anticipated foldable iPhone in 2026, Apple’s product innovation is expected to spark a new large-scale device replacement cycle, providing undervalued supply chain companies with an opportunity for value reassessment.

According to Wind Chasing Trading Desk, in a report released on the 10th, Goldman Sachs analysts expressed a positive outlook on prospects for Apple’s supply chain. The report forecasts that Apple will drive consecutive innovations in product design from an ultra-thin model in 2025, foldable phone in 2026, to the 20th Anniversary iPhone model in 2027. This is not only aimed at boosting terminal market demand, but will directly increase the component value content within the supply chain and allow leading suppliers to regain larger shares of orders.

For investors, the most direct impact is that many core companies in Apple’s supply chain are currently trading at the lower range of their historical valuation levels. The report notes that most of these companies’ expected price-to-earnings ratios are below their three-year average. Goldman Sachs believes that this indicates the market may be overly pessimistic about smartphone market saturation, underestimating the growth potential brought by new designs.

The core of this round of transformation lies in technologically advanced suppliers and companies providing key components for new product forms like foldable screens. As devices become thinner and more complex, Apple will rely more on top suppliers’ ability to develop customized components. This will directly translate to revenue growth and profit increases, especially for manufacturers supplying new components like hinges, where opportunities are particularly prominent.

The Coming Foldable Wave: Replay of the iPhone X Cycle

The foldable smartphone market is heating up rapidly, laying the groundwork for Apple’s entry. According to IDC data, in Q3 2025, global shipments of foldable smartphones increased 22% year-on-year and 144% quarter-on-quarter to 8 million units, with market penetration climbing from 1.5% in 2024 to 2.5%.

Goldman Sachs predicts that the launch of the foldable iPhone will significantly accelerate this trend. Its baseline scenario forecasts foldable iPhone shipments of 11 million units in 2026 and 27 million units in 2027; Under the optimistic scenario, this could soar to 35 million and 66 million units. Analysts believe that new designs will attract massive consumer interest, referencing the success of the iPhone X in 2017. That year, as the first full-screen model, the iPhone X commanded higher prices but still captured 51% market share among the three new models.

In addition, the market’s preference for high-end foldable smartphones also presents favorable conditions for Apple. Data shows that in Q3 2025, the average selling price (ASP) of foldable phones globally rose 12% year-on-year to $1,393. Of these, Samsung, at an ASP of $1,511, occupied 60% market share, reflecting consumers’ willingness to pay for premium brands and experiences.

Valuation Depressions Highlighted – Reassessment Opportunities Emerge

Despite optimistic growth prospects, capital markets seemingly have yet to fully price in these expectations into Apple’s supply chain. Goldman Sachs analysts Allen Chang and others note that current market caution is mainly driven by concerns over smartphone market saturation. However, they believe upcoming transformations in product design will trigger a new upgrade cycle, significantly improving supply chain fundamentals and supporting valuations to recover upwards.

A notable historical case is Hon Hai Precision. During the major design changes accompanying the iPhone X launch in 2017, Hon Hai’s price-to-earnings ratio once hit a historical high of 20x. Goldman Sachs suggests that, given the technological upgrades and consumer enthusiasm sparked by foldable phones, similar revaluation potential could appear in some supply chain stocks.

Hon Hai (Foxconn): As Apple’s long-standing core assembly partner, Hon Hai is expected to gain higher component value and market share in new models, thanks to its strength in R&D, mass production experience, and vertical integration. Goldman’s optimistic scenario indicates that foldable iPhones alone could provide a 17% potential upside to Hon Hai’s consumer electronics revenue.SZS (Suzhou New Zichen): This global leader in PC and headset hinges is expanding into foldable smartphone hinges, with its Suzhou factory being expanded and expected to complete in Q1 2026. Hinges are one of the most critical new components in foldable phones, featuring higher average prices and margins; SZS is expected to secure major orders thanks to its technical strengths.Largan Precision: As a global smartphone lens leader, Largan will benefit from foldable phones’ stricter requirements for “thinner, stronger” camera modules.AAC Technologies: A global leader in acoustic and haptic feedback components. Thinner bodies in devices require greater precision in internal components, helping the company regain more order share. In addition, AAC supplies hinges to Chinese brands, allowing it to benefit from the foldable trend in multiple ways.Zhen Ding Technology: The report notes the company is a key supplier of flexible printed circuit boards (FPCB) to Apple. In foldable smartphones, the internal value of FPCBs is expected to increase by 70%, providing significant growth opportunities for the company.TSMC: As Apple’s core chip foundry partner, TSMC’s leadership will be further consolidated. From 2026, the next iPhones are expected to fully adopt TSMC’s latest N2 process, with average wafer ASPs 29% higher than N3. Moreover, foldable phones may adopt TSMC’s WMCM advanced packaging technology, further boosting TSMC’s value in the Apple supply chain.

~~~~~~~~~~~~~~~~~~~~~~~~

The above content is sourced from Wind Chasing Trading Desk.

For a more detailed interpretation, including real-time insights and frontline research, please join [Wind Chasing Trading Desk▪Annual Membership]

Risk Warning and DisclaimerThe market involves risks, and investments need to be cautious. This article does not constitute personal investment advice, nor does it take into account the unique investment objectives, financial circumstances, or requirements of individual users. Users should consider whether any views, opinions, or conclusions in this article are suitable for their specific situation. Investment decisions based on this article are made at your own risk.