China’s smartphone vendors set to benefit from iPhone replacement cycle in 2017

China’s smartphone vendors and component makers will get a boost in 2017 on the back of another product replacement cycle spurred by Apple’s launch of a new iPhone.

Apple is expected to incorporate substantial upgrades in the upcoming iPhone 8 to celebrate the tenth anniversary of the launch of the first iPhone in 2007, after receiving mediocre consumer response to the four previous models due to minimal enhancements, according to Joseph Ho, analyst at GF Securities (Hong Kong).

“We expect a strong iPhone replacement cycle among Apple’s over 500 million users, similar to the momentum seen in September 2014 when Apple ditched Steve Jobs’ old doctrine and adopted large displays for the iPhone 6 and iPhone 6+,” Ho wrote in a research note.

iPhone’s substantial upgrades will drive volume growth for China’s components makers given that these features will be adopted by other competitors, he said.

The debut of dual cameras in the iPhone 7+ three months ago, for example, has pushed that feature into the mainstream for all smartphone makers.

“Over time, this will double demand for image sensors, lenses, VCMs [voice coil motors] etc. We also expect an uptick in adoption of fingerprint recognition features in 2017, which can be used to facilitate electronic payments,” Ho said.