Recent reports regarding Apple’s iPhone sales have sparked discussions among investors and tech enthusiasts alike. Initial claims suggested that the demand for Apple’s latest smartphone models, particularly the iPhone 16 lineup, was falling short compared to the previous year. However, emerging evidence indicates that the iPhone 16 may actually be experiencing a warm reception in the market.
As we delve deeper, it’s apparent that there’s a shift in momentum that could positively impact Apple’s sales trajectory moving forward. Recent insights from Counterpoint Research reveal a notable surge in demand for iPhone 16 models in India, where sales soared by 15% to 20% on launch day. This uptick coincides with a remarkable 35% increase in Apple’s sales from India for the fiscal year 2024, which highlights the brand’s growing popularity in the region.
T-Mobile’s CEO, Mike Sievert, noted that the carrier has also recorded an uptick in iPhone 16 sales compared to previous models. Although he mentioned that the introduction of Apple Intelligence may lead to a prolonged purchasing cycle, the potential for strong sales remains intact as the user base of older iPhone models continues to age.
Dan Ives from Wedbush Securities added further context by stating that approximately 300 million of the 1.5 billion iPhones in circulation haven’t seen upgrades for four years. With the introduction of AI features in the latest models, these older units may soon be ripe for replacement. Having sold just under 235 million iPhones last year, the stage is set for significant growth in shipments.
Investors should consider seizing the opportunity to acquire Apple shares, particularly as the launch of its AI-enhanced smartphones promises to enhance growth potential. Yet, it’s also worthwhile to spotlight another stock that stands to gain from the iPhone 16’s success—Taiwan Semiconductor Manufacturing (TSMC).
As the backbone of Apple’s technology, TSMC is responsible for manufacturing the processors that power the iPhone. The new A18 and A18 Pro chips utilize TSMC’s advanced 3-nanometer manufacturing process, which reportedly offers a 15% performance enhancement while reducing power consumption by 20% for Pro models. Moreover, the A18 chip, featured in the standard iPhone 16 and iPhone 16 Plus, is said to be 30% faster and 35% more power-efficient than its predecessors.
TSMC’s revenue reflects this trend, with the company reporting a meteoric increase in monthly revenue—33% year-over-year in June, 45% in July, and another 33% in August. Apple accounted for a significant portion of TSMC’s revenues in 2023, solidifying its role as the foundry’s largest customer. Not only does TSMC benefit from Apple’s manufacturing demands, but it also supplies Nvidia, another tech giant, further diversifying its revenue streams.
Ives predicts that Apple will produce around 90 million iPhone 16 units in 2024, an increase of 8 to 10 million over the previous year’s models. This anticipated production surge is driving TSMC’s impressive growth, especially considering the large pool of users likely to upgrade to AI-capable iPhones soon.
Additionally, Apple is rumored to have secured a significant portion of TSMC’s manufacturing capacity for 2-nanometer chips intended for the iPhone lineup in 2025. This strategy mirrors past actions when Apple acquired all of TSMC’s 3-nanometer capacity for a full year in 2023 to meet production needs.
To sum it up, TSMC’s growth trajectory appears promising, thanks in large part to its close ties with Apple and its involvement in the burgeoning AI chip market. Current valuations reveal TSMC trading at 31 times trailing earnings, compared to Apple’s 34 times, marking TSMC as a potentially more affordable investment option with substantial upside.
Investing in TSMC at this juncture could provide a unique opportunity for investors to benefit from both the anticipated rise in iPhone sales and the expansive growth expected within the AI semiconductor market.
Before making any investment decisions, it’s crucial to conduct thorough research, and with the stock market’s dynamic nature, remaining informed can lead to greater investment success. Whether you opt for Apple or its partners like TSMC, it’s clear that the tech sector is primed for significant advancements in the coming years.