Citi: iPhone 17 is unlikely to trigger an Apple upgrade boom; next year's "three growth engines" are the real key.

``` Citigroup says the iPhone 17 series is unlikely to drive a strong replacement cycle, and the market should focus on next year’s three major product launches: Advanced Siri, foldable phones, and Vision Pro 2. On September 3, according to Chasewind Trading Desk, Citigroup stated in its latest research report that although iPhone sales have historically benefited from new design changes, the upcoming Air model and the iPhone 17 series overall still amount to a period of incremental product upgrades. Citigroup's Asia supply chain research indicates that shipments of the iPhone 17 series in 2025 are expected to be 82 million units, only a slight increase compared to 81 million units for the iPhone 16. Citigroup states that although nearly half of iPhone users are still using the iPhone 14 or earlier models—providing an opportunity for upgrades—the incremental improvements of the iPhone 17 are unlikely to trigger a large-scale replacement cycle. The bank believes that the real growth catalysts will come from next year’s “three horses” of Advanced Siri, foldable phones, and Vision Pro 2. Citigroup maintains its “Buy” rating on Apple with a target price of $245, based on a 28x P/E ratio of expected 2027 EPS. Air Model Becomes the Biggest Highlight Apple is expected to unveil the iPhone 17 series at the September 9 “Awe dropping” product launch. The most significant change is the brand-new iPhone 17 Air model, which will be Apple’s thinnest and lightest iPhone to date, replacing the Plus model. Other notable upgrades include: A new 3nm chip, finally upgraded to 12GB RAM to support more AI features, camera upgrades especially for the front camera, self-developed Wi-Fi chip, changes to the camera module and frame design, and a potential $50 price increase for Pro models with larger storage capacity. In addition to iPhone upgrades, Apple is also expected to launch the new Apple Watch Series 11, Ultra 3, and SE3, along with upgrades to other products including AirPods, HomePod mini, and Apple TV. Supply Chain Research Shows Flat Shipment Expectations, Consumer Research Shows Moderate Replacement Demand According to supply chain research by Citigroup smartphone analyst Kyna Wong, the iPhone 17 series is expected to ship 82 million units in 2025, just a slight increase from the iPhone 16’s 81 million units. Citigroup maintains its forecast for iPhone unit shipments in 2025/2026 at flat/growth of 3%, i.e., 227 million/234 million units. The research report states that production plans for Q4 2025 are basically flat (down 1% year-over-year), suggesting that total production for 2025 will be up 9% year-over-year. Although this is better than a basically flat forecast, the growth is limited. IDC recently raised its 2025 global smartphone shipment forecast from 0.6% to 1%, mainly driven by iPhone’s 3.9% growth (previously forecast at 1.6%). However, with weak unit growth, IDC expects the average selling price to increase by 6% year-over-year. Citigroup’s latest US consumer electronics survey shows that smartphone replacement cycle expectations are similar to last year’s results, but purchase intention has declined compared to last year and actual purchases in the past 12 months. Key survey findings: - Nearly 50% of iPhone users are still using the iPhone 14 or earlier models, providing a good upgrade opportunity for the upcoming new models. - iPhone is expected to gain nearly 5% market share (mainly from smaller brands, not Google Pixel or Samsung). - While attention to AI features is rising, it remains a secondary consideration, giving Apple time to catch up in AI. - Interest in foldable phones slightly increased to 60%. In services, about 55% of iPhone users use Apple services while 39% pay for third-party apps, roughly unchanged from last year, showing Apple still has room to grow. Among other products, iPad continues to be the most popular tablet in purchase intention. 2026’s “Three Horses” Key Growth Drivers Citigroup believes real growth will come from next year’s three major product launches: Advanced Siri, foldable phones, and Vision Pro 2, which will drive a stronger replacement cycle. In terms of AI strategy, according to a previous Wallstreetcn article, in addition to considering Anthropic and OpenAI, Apple has also had early discussions with Google about using Gemini to power the new version of Siri. Citigroup believes this reflects Apple’s willingness to cooperate with other large language model providers, while continuing to develop its own Apple foundation models, with expectations for significantly increased AI investment and capital expenditure. For foldable phones, while iPhone has historically benefited from new design forms, Citigroup believes that true form innovation will be manifested in foldable phones. In the AR/VR headset sector, Citigroup notes that Apple Vision Pro has achieved about a 30% share among AR/VR device owners, and over 30% of users planning to buy a new headset are considering Vision Pro. Therefore, Citigroup expects next year’s trio of advanced Siri, foldable phones, and Vision Pro 2 to be the key catalysts driving a stronger replacement cycle. ~~~~~~~~~~~~~~~~~~~~~~~~ The above content is from Chasewind Trading Desk. For a more detailed analysis—including real-time interpretation and frontline research—please join [Chasewind Trading Desk Annual Membership] Risk Warning and Disclaimer The market has risks and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investing accordingly is at your own risk. ```