Apple demand remains resilient, but rising memory prices weigh on supply chain profits

Overview

This report discusses the investment implications for Apple's supply chain following its Jun-26 quarterly results and Sep-26 quarterly guidance. Apple revenue grew 16% year over year to US$109bn, while product revenue increased 18%, primarily driven by strong demand for the iPhone 17 series and MacBook Neo and market share gains. However, Sep-Q revenue growth guidance of 9%-11% was below the 12% Bloomberg consensus estimate, due in part to a 2.5 percentage-point foreign-exchange headwind and further worsening supply constraints for the iPhone, Mac, and iPad.

Core views

The core view is that end demand for Apple products remains resilient, particularly for the iPhone and Mac, but continued memory cost inflation will pressure product gross margins and could force Apple to raise prices for new iPhones, creating demand uncertainty. At the same time, Apple's cost-reduction pressure on non-memory components may be passed through to relevant supply chain companies. J.P. Morgan therefore maintains its 2026 iPhone EMS assembly volume forecast below consensus and recommends selective positioning within Apple's supply chain.

Analysis framework

The report uses Apple's quarterly results, changes in revenue by business, management guidance, EMS assembly volume forecasts, and supply chain cost pass-through as its primary analytical framework, focusing on the relationship among end demand, share changes, supply constraints, rising memory prices, and component suppliers' margins.

Methodology notes

• equity_researchsupply_chain_read_through

  Supply chain read-through analysis

  Inferring demand, revenue, and margin pressure for upstream and midstream supply chain companies from Apple's end-market sales, product guidance, EMS assembly volumes, and changes in component costs.

Asset mapping & comparison

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

• Apple (AAPL)

  Core end-market brand and source of demand

  Strengths

  Strong demand for the iPhone 17 series and MacBook Neo, market share gains, and Jun-Q revenue growth at the high end of guidance.

  Weaknesses

  Sep-Q guidance is below consensus, affected by foreign-exchange headwinds, supply constraints for SoCs and other components, and rising memory costs.

  Comparison

  Relative to Android smartphones, the report believes the iPhone may continue to achieve significant share gains in 2026.

  Risks

  Potential price increases for new iPhones could create demand uncertainty, while supply constraints may affect shipment timing.

• Genius Electronic Optical Co., Ltd (3406.TW)

  Camera lens supplier in Apple's supply chain

  Strengths

  Benefits from resilient iPhone demand and diversification into products such as CPO FAUs.

  Weaknesses

  May still be affected by Apple's cost-reduction pressure on non-memory components.

  Comparison

  The report has a stronger preference for camera lens suppliers within the supply chain.

  Risks

  Pressure on component ASPs and margins, and changes in Apple's orders.

• Largan Precision Co Ltd (3008.TW)

  Camera lens supplier in Apple's supply chain

  Strengths

  Benefits from resilient iPhone demand and has opportunities for product diversification.

  Weaknesses

  May face cost-reduction pressure on non-memory components.

  Comparison

  Compared with other pressured component suppliers, the report has a stronger preference for its camera lens business and diversification profile.

  Risks

  ASP pressure, margin volatility, and end-market demand uncertainty.

Key data

• Apple Jun-Q revenueUS$109bn, +16% YoYAt the higher end of management's previous 14%-17% year-over-year growth guidance range.
• Sep-Q revenue growth guidance+9%-11% YoYBelow the Bloomberg consensus estimate of +12%, including an approximately 2.5 percentage-point foreign-exchange headwind.
• 2H26 iPhone EMS assembly volume forecast114mn units, -7% YoYIncluding 52mn units in 3Q26 and 85mn units in 4Q26.
• 2H26 iPhone 18 series assembly volume forecast88mn unitsBelow the 97mn units for the iPhone 17 series in 2H25, mainly due to fewer new models.
• 2026 foldable iPhone assembly volume forecast7-8mn unitsAssuming the foldable iPhone may launch in 2H26.
• Full-year 2026 iPhone EMS assembly volume forecastApproximately 250mn unitsBroadly flat versus the high end of 250mn units in 2025, implying significant iPhone share gains relative to Android smartphones.
• Product gross margin40.1%Up 555bps year over year and 138bps sequentially, primarily due to a 2.5% favorable impact from tariff refunds.

Impact & implications

For investors, strong end-market demand for Apple products supports order visibility for core supply chain companies, but rising memory prices and Apple's cost-reduction demands for non-memory components may compress ASPs and margins for some component suppliers. The report recommends prioritizing supply chain companies that benefit from iPhone demand while also having product diversification capabilities, such as camera lens suppliers Genius and Largan.

Risks

• Continued memory cost increases may compress Apple's product margins and supply chain profitability.
• Worsening supply constraints for SoCs and other components may affect iPhone, Mac, and iPad shipments.
• Potential price increases for new iPhones may create demand uncertainty.
• Apple's cost-reduction pressure on non-memory components may weigh on relevant suppliers' ASPs and margins.
• Foreign-exchange headwinds may affect Sep-Q revenue growth guidance.

What to watch

• Whether Apple's actual Sep-Q revenue growth reaches the 9%-11% guidance range.
• Mass production and assembly progress for the iPhone 18 series and foldable iPhone in 2H26.
• The magnitude of memory price increases and their pass-through to product margins.
• Whether supply constraints for key components such as SoCs ease.
• Progress by Genius and Largan in diversified products such as CPO FAUs.