The first Big Tech earnings of the new year kick off this week, with Intel (INTC) set to report its results after the bell on Thursday. AI will undoubtedly lead the conversation. As in prior quarters, questions remain about how companies are monetizing their vast investments in the red-hot technology and whether hyperscalers like Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT) and social media giant Meta (META) will continue to increase spending. Investors will also be interested in PC chip sa ...

Investment Rating - The report maintains a cautious outlook on the smartphone industry, with a preference for component suppliers over OEMs due to rising memory prices and supply challenges [5][8]. Core Insights - The smartphone industry is expected to face challenges in 2026, with limited unit growth forecasted at +1.0% YoY in 2026 and +2.0% YoY in 2027, following a +3.5% YoY growth in 2025 [2][8]. - The UBS Evidence Lab 4Q25 Smartphone Survey indicates a moderate increase in purchase intent, with 40% of respondents planning to buy a smartphone in the next 12 months, up from 36% in 2Q25 [3][19]. - Rising memory prices are projected to significantly impact Bill of Material (BOM) costs, potentially accounting for approximately 14% of flagship smartphone BOM costs and 34% of mid-range/lower-end smartphone BOM costs by 4Q26 [4][101]. Summary by Sections Industry Outlook - The smartphone market is anticipated to grow moderately, with unit sell-in forecasts slightly raised to 1.27 billion units in 2025 and 1.28 billion units in 2026, reflecting a +3.5% and +1.0% YoY growth respectively [50][55]. - The average age of the smartphone installed base has decreased to 22.0 months, indicating a normalization in the replacement cycle [30][44]. Purchase Intent Trends - Purchase intent for the iPhone 17 series is strong, with 66% of respondents interested in this model, up from 61% for the iPhone 16 series [3][89]. - Retention rates for Apple and Samsung remain stable at 87% and 75% respectively, while Chinese OEMs have seen declines in retention rates [59][61]. Component Supplier Preference - The report favors component suppliers such as ASE, SK Hynix, and TSMC, while maintaining neutral ratings on major OEMs like Apple, Lenovo, and Xiaomi, and a buy rating on Samsung Electronics [5][8]. - The memory supply shortage is expected to create significant challenges for OEMs, particularly smaller ones, as they may struggle to secure adequate memory supply [4][110].

Group 1: Global Smartphone Market Outlook - Global smartphone shipments are expected to decline by 0.9% in 2026 due to rising memory chip prices pushing average selling prices to record highs [1] - The decline in 2026 follows a stronger 2025, where shipments are forecasted to grow by 1.5% to 1.25 billion units, driven by Apple's strong performance and a rebound in China [1] Group 2: Apple’s Performance - Apple is projected to have a record year in 2025, with shipments expected to rise by 6.1% to 247 million units, fueled by high demand for the iPhone 17 series [2] - In China, Apple's market share surpassed 20% in October and November, leading to a revised forecast of 3% shipment growth in the region for the year [2] Group 3: Revenue and Market Dynamics - Apple is expected to generate over $261 billion in revenue from iPhone sales in 2025, representing a 7.2% growth from the previous year [3] - The anticipated downturn in 2026 is attributed to component shortages and Apple's decision to delay its next base iPhone model to early 2027, which will reduce iOS shipments by more than 4% [3] Group 4: Pricing and Market Value - Despite the decline in units, average selling prices are expected to rise to $465 next year, pushing the market's total value to a record $578.9 billion [4] - The ongoing global memory shortage is expected to constrain supply and raise costs, particularly impacting low-to-mid range Android devices [3][5] Group 5: Vendor Strategies - Vendors are expected to adjust their portfolios towards higher-margin models to offset rising bill-of-material costs, with some likely to raise prices outright due to the scarcity and increased cost of memory stocks [5]

December 1, 2025 05:27 AM GMT Semiconductors | North America Asia trip takeaways highlight AI strength testing the limits of semiconductor ecosystem | What's Changed | | | | --- | --- | --- | | Broadcom Inc. (AVGO.O) | From | To | | Price Target | $409.00 | $443.00 | | NVIDIA Corp. (NVDA.O) | | | | Price Target | $235.00 | $250.00 | Focus is AI strength across the board; we raise estimates on AVGO but importantly also for NVDA, as we see both ramping materially next year. We also focus on memory strength an ...