CICC: Apple releases new mobile phones and wearables, doubling down on AI terminals

According to the financial news app Zhitong Finance, CICC released a research report stating that Apple (AAPL.US) will hold its first new product launch event for the fall of 2024 in the early morning of September 10th Beijing time. The update of wearable products is particularly eye-catching, with the iPhone 16 standard version equipped with the A18 chip to enhance edge AI computing power, and the iPhone 16 series featuring a camera control button with AI interactive functionality, both exceeding market expectations. With the landing of the fall launch event, the era of Apple AI terminals is officially beginning, with mobile phones and other terminals serving as edge computing power support points, in conjunction with Apple's own cloud-based models and computing power support, expected to realize the landing of AI functions and continuous OS upgrades. CICC is optimistic about Apple and related supply chains such as Luxshare Precision (002475.SZ).

The iPhone 16 series fully supports Apple Intelligence, ushering in the era of AI terminals. Apple has released the 16 and Pro series, both fully supporting Apple's AI functions, with the addition of a side camera control button. This feature allows for quick access to the shooting function and slide adjustment, while also enabling one-touch access to cloud-based AI models for image recognition feedback. CICC believes that the camera control function provides users with a new AI interactive interface, likely to increase the frequency of user AI function usage and optimize the experience. In addition, the chip in the standard iPhone 16 has been upgraded from A16 Bionic to A18, using second-generation 3nm technology, significantly improving computing power and reducing power consumption. The Pro series is equipped with the A18 Pro chip, with overall performance improved by 15%, and featuring a dedicated Apple AI processing module. On the software side, Apple announced that the Apple Intelligence program will first be available to North American English users in October, and will support English versions in multiple countries including the UK in December, with Chinese and Japanese versions expected to be supported next year. CICC believes that with the development of more countries and language versions, the number of Apple Intelligence users is expected to increase rapidly, driving sustained growth in hardware sales.

The entire AirPods product line has received software and hardware upgrades, with rich features expected to drive shipment growth. In terms of headphones, Apple has innovated across the entire AirPods product line. Among them, AirPods 4 has released two products, both upgraded to the H2 chip and extended battery life to 30 hours, with the base model priced at $129 and the noise-canceling model featuring active noise cancellation priced at $149. CICC believes that Apple has extended the noise-canceling feature from the Pro series to the standard version of AirPods, improving product cost-effectiveness and likely driving an increase in AirPods sales. AirPods Max has been upgraded to a Type-C interface and added color options. AirPods Pro 2 has added multiple features, including optimizing passive noise cancellation for better call quality in noisy environments, and introducing hearing test functionality. In addition, AirPods have introduced an unofficial hearing aid function to assist people with hearing impairments in daily communication.

The Apple Watch has released a special edition for its tenth anniversary, with significant upgrades in appearance and functionality. The Watch 10 is the first to feature a wide-angle OLED screen, allowing users to read screen content from more angles, with a 30% larger display area than the Watch 6. Through system-in-package (SiP), speakers, integrated antennas in the bezel, etc., the thickness of the watch has significantly decreased, optimizing the user wearing experience In terms of appearance, the Apple Watch 10 adds a bright black color and is equipped with the same titanium alloy material as the Ultra series. In terms of functionality, the Watch 10 features health functions such as sleep and breathing pause detection, as well as new sports-related functions such as snorkeling and tide reminders. In addition, the Ultra 2 adds a pure black color and comes with a mountain climbing mode, with more precise data monitoring functions. CICC believes that both the Watch 10 and Ultra 2 have innovative features and their shipment volumes are worth looking forward to.

Risks

Apple's new product sales fall short of expectations; AI terminal landing and user experience fall short of expectations