The AI Wave Is Coming: Apple iPhone 16 Leads the New Growth in the Smartphone Market

The AI Wave Is Coming: Apple iPhone 16 Leads the New Growth in the Smartphone MarketMarket research firm IDC's latest report indicates that global smartphone shipments are poised for growth in 2024, reaching an estimated 1.23 billion units, a 5

The AI Wave Is Coming: Apple iPhone 16 Leads the New Growth in the Smartphone Market

Market research firm IDC's latest report indicates that global smartphone shipments are poised for growth in 2024, reaching an estimated 1.23 billion units, a 5.8% year-over-year increase. This surge is attributed to the rise of generative AI (GenAI). By the end of 2024, smartphones equipped with GenAI capabilities are projected to skyrocket by 344%, capturing a market share of 18%.

Apple's upcoming AI phone, the iPhone 16, is undeniably at the forefront of this trend. Media reports suggest that Apple is brimming with confidence regarding the iPhone 16's sales, placing initial orders for 88 to 90 million units from component suppliers. This represents a 10% increase compared to the initial orders for the iPhone 15 last year. While suppliers emphasize that iPhone makers typically place larger initial orders before a product launch, subsequently adjusting based on actual demand, there's a cautious optimism among Apple suppliers about the iPhone 16's sales. They anticipate that overall iPhone shipments will remain stable throughout the year.

Investment firm Wedbush adopts an even more optimistic outlook on the iPhone 16's market performance, believing it will ignite Apple's largest upgrade cycle ever. Analysts point out that approximately 300 million iPhones worldwide haven't been upgraded in over four years, setting the stage for significant demand growth. As the AI-driven upgrade cycle takes shape, Apple's iPhone sales in fiscal year 2025 could surpass 240 million units. The Chinese market remains a crucial growth engine for Apple.

Currently, only the Apple iPhone 15 Pro/ProMax models feature Apple Intelligence, and they are also the only iPhone models with 8GB of RAM. Prominent analyst Ming-Chi Kuo predicts that the iPhone 16 series will maintain 8GB of RAM. This could limit Apple's development of large-scale on-device models. However, Kuo also reveals that the 2025 iPhone 17 series will see only the ProMax model sporting 12GB of DRAM, along with an upgraded cooling system, while other models retain 8GB of DRAM. Enhancing the device's AI capabilities will be a primary selling point for the iPhone 17 ProMax.

The emergence of AI smartphones is expected to drive a wave of hardware upgrades. A research report from Chinas investment bank, Xingye Securities, points out that to fulfill the performance requirements of large models, demand for components like SoCs, memory, and cooling systems will surge. The upgrade cycle fueled by AI phones will propel the overall development of the electronics supply chain, with high-end product lines benefiting first. Apple, holding a dominant position in the high-end market, will significantly benefit from this upgrade wave, presenting growth opportunities for related device manufacturers, ODM companies, and "Fruit Chain" enterprises.

From a supply chain perspective, processors and memory are clear beneficiaries, followed by cooling components and other incremental devices. Storage expansion, the localization of processor production, and the emergence of new opportunities in cooling, microphones, and other incremental components are all on the horizon.

The rise of AI phones will inject new vitality into the smartphone market, creating fresh opportunities for the supply chain. As AI technology continues to advance, the smartphone market will increasingly prioritize intelligent experiences. Apple's introduction of the iPhone 16 is poised to lead this technological revolution.