3Q26 iPhone and iPad assembly volume forecasts both remain unchanged

Overview

This report is Morgan Stanley's monthly databook on Greater China technology hardware, with a core focus on quarterly iPhone and iPad assembly volumes, sell-in trends, and supply chain checks. The report concludes that forecasts for both 3Q26 iPhone and iPad assembly volumes are unchanged, while maintaining an In-Line view at the industry level.

Core views

The core views include: first, 2Q26 iPhone assembly volume was in line with expectations and better than normal seasonality, with checks on major assembly partners showing sequential improvement in June iPhone shipments, indicating that end demand remained solid despite rising memory costs; second, 3Q26 iPhone assembly volume remains at 54 million units, but the year-over-year decline reflects the SKU mix shift toward higher-end models and the planned 1H27 launch of iPhone 18; third, for iPad, both 2Q26 and 3Q26 assembly volumes are 13 million units, inventory is expected to remain normal, but rising memory and materials prices may have an impact.

Analysis framework

The report uses supply chain assembly volume tracking, quarter-over-quarter and year-over-year comparisons, checks with major assembly partners, and an industry coverage rating framework to assess the demand and supply cadence of Greater China technology hardware.

Methodology notes

• Supply chain trackingAssembly volume and sell-in tracking

  Assess end demand and supply chain cadence through quarterly assembly volume, quarter-over-quarter and year-over-year changes, and checks with assembly partners.

  The report compares 2Q26 actual assembly volume with Morgan Stanley's forecasts and the typical seasonal range, and on that basis maintains its forecasts for 3Q26 iPhone and iPad assembly volumes.

• Industry view frameworkMorgan Stanley Industry View In-Line

  Industry performance over the next 12 to 18 months is expected to be broadly in line with the relevant market benchmark.

  The disclosure section states that In-Line means the analyst expects the covered industry to perform broadly in line with the relevant broad market benchmark over the next 12 to 18 months.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Greater China technology hardware coverage universe

  The report's main research object and the asset carrying the industry view.

  Strengths

  2Q26 iPhone assembly volume was better than usual seasonality, and June shipments improved sequentially.

  Weaknesses

  3Q26 iPhone is still expected to decline year over year, and iPad is also expected to decline year over year.

  Comparison

  The industry view is In-Line, implying no clear overweight or underweight signal relative to the relevant market benchmark.

  Risks

  Rising materials and memory prices, changes in product cadence, and uncertainty around new model ramp-up may affect assembly volumes and margins.

• Hon Hai Precision

  One of the major iPhone assembly partners mentioned in the report.

  Strengths

  Supply chain checks show major assembly partners drove this quarter's assembly volume to outperform seasonality.

  Weaknesses

  The report does not separately disclose the earnings impact on Hon Hai or any change in target price.

  Comparison

  Compared with the overall coverage universe, Hon Hai has more direct exposure to the iPhone assembly cadence.

  Risks

  iPhone Fold ramp-up, iPhone 18 launch timing, and changes in memory costs may affect orders and margins.

• iPad supply chain

  Assets related to the product line tracked in the report.

  Strengths

  3Q26 inventory is expected to remain normal, and the assembly volume forecast is stable.

  Weaknesses

  Both 2Q26 and 3Q26 iPad assembly volumes are down year over year.

  Comparison

  Compared with iPhone, iPad lacks incremental signals of outperforming seasonality in the report.

  Risks

  Rising memory and materials prices may affect assembly and margin performance.

Key data

• 3Q26e iPhone assembly volume5400万台Forecast unchanged; up 4% QoQ and down 2% YoY.
• 2Q26 iPhone assembly volume5200万台In line with Morgan Stanley's forecast; down 7% QoQ and up 12% YoY, better than the typical 15% to 25% QoQ seasonal decline in 2Q.
• 3Q26e iPad assembly volume1300万台Forecast unchanged; flat QoQ and down 7% YoY.
• 2Q26 iPad assembly volume1300万台In line with Morgan Stanley's forecast; up 8% QoQ and down 10% YoY.
• 2H26 iPhone Fold assembly volume forecast700万至800万台Forecast unchanged; it remains necessary to observe whether ramp-up progress leads to upward or downward revisions later.
• Industry viewIn-LineCoverage scope is Greater China Technology Hardware.

Impact & implications

The report's implications for the supply chain are neutral to slightly stable: iPhone performed better than seasonality in 2Q, showing that demand resilience remains; however, the 3Q year-over-year decline, the shift in product mix toward premium SKUs, and rising material costs limit the room for further upward revisions. For investment judgment, the key is not a rating change on any single stock, but whether the short-term shipment cadence of Apple's hardware supply chain holds up, whether the iPhone Fold ramp exceeds expectations, and whether rising costs compress margins across the related hardware chain.

Risks

• Rising memory costs and materials prices may affect margins for iPad and the related hardware supply chain.
• The shift in new iPhone model SKUs toward premium models such as the 18 Pro/Pro Max and iPhone Fold may lead to slower year-over-year assembly cadence.
• The planned 1H27 launch of iPhone 18 may alter the product cadence and supply chain pull-in structure for 2H26 and 3Q26.
• The 7 million to 8 million units iPhone Fold assembly volume in 2H26 still depends on ramp-up progress and carries upside or downside revision risk.
• Morgan Stanley discloses investment banking, market-making, or other service relationships with multiple covered companies, and investors should treat the research report as only one factor in decision-making.

What to watch

• Whether 3Q26 iPhone assembly volume holds at 54 million units, and whether the year-over-year decline widens or narrows.
• Whether 2H26 iPhone Fold ramp-up progress supports the forecast of 7 million to 8 million units.
• Whether the sequential improvement in iPhone shipments after June can continue.
• The actual impact of rising memory and materials prices on iPad and hardware supply chain gross margins.
• The impact of changes in premium SKU mix on order allocation within the Greater China technology hardware supply chain.