Investment Rating - The report maintains a "Buy" rating for key suppliers including Hon Hai, Luxshare, Largan, AAC, and Cowell, indicating a positive outlook for these companies in the context of Apple's production strategy and potential tariff impacts [16][18][19][20][21][22]. Core Insights - iPhone production for 2025 is expected to be 227 million units, a slight decrease of 1% year-on-year, with adjustments made for promotional activities in China and increased production of older models [1][2]. - The iPhone 17 series is projected to have a total production of 90 million units in the second half of 2025, with specific model breakdowns indicating a stable demand compared to previous series [3][4]. - Apple is strategically positioning its production in India and Vietnam to mitigate tariff risks, although uncertainties remain regarding tariff negotiations in India [7][9][10]. Summary by Sections iPhone Production Outlook - iPhone shipments in 4Q24-1H25 were stronger than expected due to early pull-ins related to tariff concerns and price cuts in China [1]. - Production assumptions for 3Q25 are set at 57.5 million units, reflecting a 3% year-on-year increase, while 4Q25 is projected at 76 million units, a 7% decrease year-on-year [2]. iPhone 17 Series Details - The iPhone 17 series production is estimated at 90 million units, with model-specific forecasts indicating a slight increase in the i17 Air model compared to its predecessor [3][4]. - The EMS split for the i17 series shows Hon Hai and Luxshare involved in four models, with a production ratio of approximately 6:4 [4]. Tariff and Pricing Strategy - Apple has chosen India as a secondary production hub for iPhones and Vietnam for other products, with potential tariffs from the US impacting pricing strategies [7][9][10]. - Price adjustments for iPhone models may occur post-tariff implementation, but global price increases are expected to be moderate to alleviate impacts on the US market [10]. Component and Technology Developments - The report highlights advancements in Apple's in-house ICs and new architectures for the iPhone 17 and 18 series, including higher computing power and improved camera technologies [6][11]. - TSMC's N2 process adoption is expected to significantly impact the supply chain, with projections indicating a demand of at least 180kwpa for N2 in 2026 [11][12]. Investment Opportunities - The report identifies strong investment opportunities in companies like Hon Hai, Luxshare, Largan, AAC, and Cowell, citing their favorable positions in the supply chain and potential for earnings growth [16][18][19][20][21][22].