Morgan Stanley lowers global smartphone shipment forecast for this year by 15%

Morgan Stanley published a report, predicting that smartphone shipments will face significant downward pressure in 2026 due to a sharp rise in memory costs. Companies with higher exposure to Apple and non-smartphone businesses will be in a more favorable position. The recommended order is Xiaomi (01810.HK) > AAC TECH (02018.HK) > BYD ELECTRONIC (00285.HK) > Crystal-Optech (002273.SZ).

The firm expects smartphone OEM manufacturers to raise average selling prices and pass on most component costs. Such price increases are likely to lead to a substantial demand shortfall for Android smartphones, as end users are more price-sensitive. The firm has lowered its global smartphone shipment forecast for 2026 by 15% to 1.1 billion units. Among these, Apple shipments may decline by 2%, while Android shipments are expected to decrease by 16% year-on-year. The decline will be comparable to the downturn in 2022, and may even be larger. Therefore, the performance of the Apple supply chain may also outperform that of the Android supply chain.

Among Android OEMs, the firm prefers Xiaomi over Transsion Holdings (688036.SH), with Transsion's rating downgraded to "in line with the market." At the same time, the target prices for AAC TECH and BYD ELECTRONIC have been lowered, but due to their exposure to Apple, the "overweight" rating is maintained, and Sunny Optical (02382.HK) has been downgraded to "in line with the market." Target prices are detailed in another table