Apple's new round of "shape transformation," how to reshape the valuation of the Apple supply chain?

Apple Inc. is expected to continuously launch new products with significant design changes in the coming years, and this series of initiatives is seen as a new catalyst for reshaping the valuation of its supply chain. According to a recent report from Goldman Sachs, starting with the highly anticipated foldable iPhone in 2026, Apple's product line innovation is expected to stimulate a new round of large-scale device replacement cycles, thereby providing supply chain companies, which are currently undervalued, with opportunities for value reassessment.

According to news from the Wind Trading Desk, in a report released on the 10th, Goldman Sachs analysts expressed a positive outlook on the prospects of Apple's supply chain. The report predicts that Apple will continuously drive product design changes from the slim models in 2025, the foldable phones in 2026, to the iPhone 20th anniversary model in 2027. This move aims not only to boost end-market demand but also to directly increase the component value content of the supply chain and allow leading suppliers to regain more order share.

For investors, the most direct impact is that many core companies in Apple's supply chain currently have stock prices at lower levels within historical valuation ranges. The report points out that most of these companies have expected price-to-earnings ratios below the average level of the past three years. Goldman Sachs believes that this reflects the market's possibly overly pessimistic view on the saturation of the smartphone market, underestimating the growth potential brought by new design changes.

The core of this round of transformation is technology-leading suppliers and companies providing key components required for new forms such as foldable screens. As devices become thinner and more complex, Apple will increasingly rely on the ability of top suppliers to develop customized components. This will directly translate into revenue growth and profit enhancement for these companies, especially for manufacturers providing entirely new parts such as hinges, where opportunities are particularly prominent.

The Wave of Folding Screens is Coming, Replaying the iPhone X Cycle

The foldable smartphone market is rapidly heating up, laying the groundwork for Apple's entry. According to IDC data, global foldable smartphone shipments in the third quarter of 2025 are expected to grow by 22% year-on-year and 144% quarter-on-quarter, reaching 8 million units, with penetration rising from 1.5% in 2024 to 2.5%.

Goldman Sachs predicts that the launch of Apple's foldable iPhone will significantly accelerate this trend. Its baseline scenario predicts that shipments of the foldable iPhone will reach 11 million units and 27 million units in 2026 and 2027, respectively; while in an optimistic scenario, this number could reach as high as 35 million units and 66 million units. Analysts believe that the new design will greatly attract consumers, with its market effect comparable to the success of the iPhone X in 2017. That year, as the first model to adopt a full-screen design, the iPhone X, despite its higher price, still captured 51% of the market share among the three new models.

In addition, the market's preference for high-end foldable smartphones has also created favorable conditions for Apple. Data shows that the average selling price (ASP) of global foldable smartphones in the third quarter of 2025 rose by 12% year-on-year to $1,393. Among them, Samsung, with an ASP of $1,511, accounted for 60% of the market share, indicating that consumers are willing to pay for quality brands and high-end experiences

Valuation Gap Highlights, Revaluation Opportunities Emerge

Despite promising growth prospects, the capital market's pricing of Apple's supply chain does not seem to fully reflect this expectation. Goldman Sachs analysts, including Allen Chang, pointed out in their report that the market's current cautious attitude mainly stems from concerns about the saturation of the smartphone market. However, they believe that the upcoming design transformation will initiate a new wave of device upgrades, significantly improving the fundamentals of supply chain companies and supporting an upward revision of their valuations.

A historical case for reference is Hon Hai Precision Industry. During the release of the iPhone X in 2017, accompanied by significant design changes, Hon Hai's price-to-earnings ratio once reached a historical high of 20 times. Goldman Sachs believes that, considering the technological upgrades brought by foldable smartphones and consumer enthusiasm, a similar revaluation potential may reappear in some supply chain stocks.

• Hon Hai: As a long-term core partner in iPhone assembly, Hon Hai is expected to gain higher component value and market share in new models due to its R&D strength, mass production experience, and vertical integration capabilities. Goldman Sachs' optimistic scenario analysis shows that just the foldable screen iPhone alone could bring a potential upside of 17% to Hon Hai's consumer electronics business revenue.
• New Zhi Sheng: This global leader in PC and headphone hinges is expanding into the foldable smartphone sector, with its Suzhou factory undergoing expansion, expected to be completed in the first quarter of 2026. Hinges are one of the most critical new components in foldable smartphones, with higher average selling prices and gross margins, and SZS is expected to win major orders due to its technological advantages.
• Largan Precision: As a global leader in mobile phone lenses, the company will benefit from the "thinner and stronger" technical requirements for camera modules in foldable smartphones.
• AAC Technologies: A leader in global acoustic and haptic feedback components. Thinner bodies require higher precision for internal components, helping the company regain more order share. Additionally, the company has supplied hinges to Chinese brands, allowing it to benefit from the foldable screen trend in multiple ways.
• Zhen Ding Technology: The report indicates that the company is a key supplier of flexible printed circuit boards (FPCB) for Apple, with the FPCB value content inside foldable smartphones expected to increase by 70%, which will bring significant growth opportunities for the company.
• Taiwan Semiconductor: As Apple's core chip foundry partner, TSMC's leading position will be further consolidated. Starting in 2026, the next generation of iPhones is expected to fully adopt TSMC's latest N2 process, with an average wafer selling price 29% higher than N3. Additionally, foldable smartphones are expected to utilize TSMC's WMCM advanced packaging technology, further enhancing TSMC's value in Apple's supply chain