China Smartphone Sep’26/9M26 Sell-in Shipments -23%/-13% YoY

According to CAICT, China smartphone sell-in shipments were down 22.9% YoY (or +28.1% MoM) to 19.7mn units in Sep-26, bringing 9M26 sell-in shipment down by 12.8% (vs. sell-out -9% YoY). We note (1) domestic OEM sell-in shipments declined 16% YoY in 9M26 vs. sell-out shipment of -11%; (2) non-domestic OEM handset shipments were flattish YoY in 9M26 vs. iOS sell-out shipment +10%. Apple highlighted supply constraint (SoC) to increase significantly in 3Q26 that limited the production build flexibility, which may also impact or delay the production build from 4Q26 likely. We believe most of the weakness among smartphone supply chain is well priced-in. We prefer Apple chain with earnings stability and spec upgrade: Luxshare (better mix + actuator), Sunny Optical (lens share gain + actuator), AAC (VC heatsink). We also pick Xiaomi and Longcheer as beneficiaries of unwinding AI and potential consumer memory peaking expectation.