Following the release of the new iPhone 17 series, Apple (AAPL.US) stock declined instead of rising, falling 4.7% over two consecutive days with market capitalization shrinking by $164.576 billion, equivalent to 1.17 trillion yuan. After modest rebounds in subsequent days, why did the new model fail to impress investors?

Apple unveiled the new iPhone 17 series at its product launch event on September 9, simultaneously updating Apple Watch, AirPods and other products. The iPhone 17 series garnered significant attention, with the standard iPhone 17 maintaining its starting price at $799 while supporting various "Apple Intelligence" AI scenarios and achieving multiple major upgrades including performance, energy efficiency and storage, with battery life extended by 8 hours.

The iPhone 17 series starts at 5,999 yuan in mainland China, with the new ultra-thin iPhone Air priced from 7,999 yuan and the top-tier iPhone 17 Pro Max reaching 17,999 yuan. Apple's JD.com flagship store opened pre-orders simultaneously, with JD.com data showing over 3 million pre-registrations before pre-sales began. The official website crashed on the 12th due to overwhelming demand, demonstrating strong consumer purchase intent.

However, reactions among Hong Kong and A-share investors differed following the iPhone 17 series launch. A-share Apple supply chain stocks had been rallying for several days prior, with multiple stocks hitting daily limits after the announcement and showing active performance, while Hong Kong Apple supply chain stocks remained relatively subdued with slight differentiation and minimal impact.

In recent years, amid Apple's declining sales momentum, Hong Kong-listed stocks have shown reduced sensitivity to Apple, with investment logic fundamentally shifting.

**Chinese Market Struggles with Declining Revenue Share**

In the smartphone industry, Apple and Samsung have consistently held the top two global positions with unshakeable dominance. According to Canalys reports, global smartphone market shipments reached 1.22 billion units in 2024, up 7% year-over-year, while Apple shipped 256 million units, down 1% but capturing 18% global market share for first place. Both quarters in the first half maintained growth, though market share dropped to second place.

While Apple performs excellently globally, it has entered an adjustment period in the Chinese market, which as a core market has become the primary variable in its global shipment growth. Apple's 2024 China shipments totaled 42.9 million units, declining 17% year-over-year, with Chinese market share dropping 3 percentage points to 15%. In Q1 2025, China shipments continued declining 9%, with Q2 showing some recovery but still weaker than peer performance, indicating a downward market share trend.

Under intense competition from Huawei, Xiaomi, OPPO and VIVO, Apple faces relative weakness not only in smartphones but across other smart hardware categories.

In wearable wrist devices, Apple's China shipments in the first half reached only 1.9 million units, up 16.6% year-over-year, significantly below Huawei's 28.9% and Xiaomi's 100.9% growth rates, with market share at just 5.7%, far below Huawei's 35.7% and Xiaomi's 32.2%.

In smartwatches, Apple's Q2 shipments declined 3% with market share dropping to 17%, overtaken by Huawei at 21%, while Xiaomi's shipments surged 38% with market share rising 2 percentage points to 9%, second only to Apple and rapidly closing the gap.

Notably, China represents one of Apple's core markets with over 20% revenue contribution. In fiscal 2025, China revenue declined for two consecutive quarters, only reversing in the recently reported Q3 with modest 4% growth, while revenue share dropped to 23.07%.

Apple's smart hardware device suppliers derive most revenue from East Asia, with China as a core supplier source. In Apple's published supply chain list, Chinese suppliers account for over 50%. For iPhone assembly, China and India's assembly shares were 84% and 14% respectively in 2024.

Under global localized production deployment, demand variables in China's smart hardware market influence domestic supply chain procurement expectations to some extent.

**Supply Chain Performance Diverges with AI-Driven Independent Trends**

Apple's supply chain primarily revolves around smartphone components including assembly contracting. The iPhone series is manufactured by Industrial Foxconn, batteries by BYD Electronics, AirPods by Luxshare Precision and GoerTek at two major facilities. For core A16 chips, JCET Group and ChipMOS Technologies provide chip packaging and testing. For panels and displays, there are BOE and Tianma. For camera modules, there are Q TECH (01478), Sunny Optical Technology (02382) and COWELL (01415), plus acoustic components from AAC Technologies (02018).

Given Apple's declining China sales in recent years and AI's rise, supply chain companies are striving to reduce Apple dependency, create new growth curves, and gain capital favor with independent performance.

For instance, Industrial Foxconn serves as Apple's core long-term manufacturing supplier, but over the past two years has increased AI deployment, focusing on a "2+2" strategy with AI computing power industrial chain as the main axis, continuously investing in AI infrastructure and core AI application technology, shedding its contract manufacturing label.

Performance remained strong in 2024 and H1 2025 with continuously improving profit margins, particularly impressive AI business performance with overall server growth exceeding 50% and cloud service provider servers growing over 100%.

Benefiting from AI business deployment and performance, Industrial Foxconn's market capitalization has surged nearly twofold this year, reaching 8x PB and 45x PE, above industry levels. In contrast, Apple's market cap fell 7.8% this year while Industrial Foxconn achieved independent performance.

Most Hong Kong-listed Apple supply chain companies are pursuing transformation and creating new growth while achieving solid market cap performance. For example, COWELL, deeply rooted in precision optical modules, has accelerated emerging business deployment with AI application scenarios, optimistic about LiDAR, robotics, and VR/AR opportunities, actively expanding emerging terminal markets to enhance business diversification.

The company mainly benefits from North American major client camera module order growth and AI edge demand growth, showing impressive performance with revenue nearly doubling in 2024 and H1 2025.

AI-side deployment has also driven the company's market cap bull run, increasing over 10-fold in six years, with current PB and PE ratios at 6.4x and 22x respectively. PE valuation remains reasonable in a recovery phase with significant revaluation potential.

**Optimistic New Product Expectations Present Valuation Logic Reconstruction Opportunities**

Hong Kong Apple supply chain stocks have each achieved independent performance, but benefiting from overall market investment environment, valuations have performed excellently this year with some sector stocks even doubling, such as Q TECH, whose market cap increased 120% this year, far exceeding industry levels.

The sector's valuation logic has shifted from original Apple performance-driven to AI business-driven, with new growth point creation enabling some stocks to achieve high valuation premiums.

However, Apple-driven logic persists. Once China market shipments rapidly scale up, logic correction will occur again, returning the Apple supply chain sector to correlation mode.

Apple maintains high confidence in new products, planning to produce approximately 100 million iPhone 17 series units in 2025, higher than the initial 90 million unit estimate for the previous iPhone 16 generation. Investment banks are generally optimistic about the company's new products. Goldman Sachs believes the iPhone 17 series will effectively stimulate users holding older devices to upgrade, expecting to drive Apple's iPhone business revenue growth of 5-7% in fiscal 2025 and 2026.

Overall, while Apple has shown declining trends in China over the past two years with some quarterly improvement, whether the iPhone 17 series launch can reclaim more market share remains uncertain, mainly due to Huawei and Xiaomi also releasing new products amid intense competition and high user loyalty, which is unfavorable for Apple's incremental demand.

However, Apple and investment banks remain optimistic about new products with positive consumer market response, and global market sales share is expected to further improve.

Although Hong Kong Apple supply chain investment logic has changed, based on AI deployment and new growth point creation with independent performance capability, sensitivity to Apple performance has gradually decreased over the past two years, but individual stocks with slow transformation and weak performance remain at valuation bottoms.

With Apple's new products about to launch, awaiting pre-sale and launch performance, this may present an opportunity for Apple supply chain valuation logic reconstruction.