News Briefing Apple has begun requesting its key component suppliers to prepare materials for the production of its new budget-friendly iPhone SE, expected to launch in March. The "iPhone SE 4" will be Apple's most affordable AI smartphone with the largest screen in its budget lineup. Impact analysis In March 2025, Apple will introduce Apple Intelligence into the iPhone SE4, marking the first time AI features are extended from flagship devices to mid-range models. With nearly three years since the release of the SE3, this new model is expected to trigger a significant upgrade cycle among its user base. Meanwhile, Qualcomm plans to launch a lower-frequency version of its Snapdragon 8 Elite chip, originally designed for flagship phones with generative AI capabilities, tailored for mid-range devices. This version is set to debut in the first quarter of 2025. Given Qualcomm's strong presence in the smartphone market, this move is also anticipated to impact mid-range smartphones significantly. Together, these advancements are projected to drive AI smartphone penetration rates to 30% by 2025. Smartphones, as flagship products in the Edge computing space, are uniquely positioned to familiarize a vast user base with AI technology through mid-range devices. These AI experiences are expected to boost consumer adoption and extend into other consumer electronics, such as laptops. While AI adoption in laptops fell short of expectations in 2024, this shift may create an opportunity to reverse the trend. Coupled with the end of Windows 10 support, the market could see an AI-powered PC upgrade wave. Both smartphones and laptops are key application areas for Taiwan's electronics component industry. From a broader perspective, the impact of AI over the past two years has been primarily focused on servers and other cloud-related products, with minimal effects on consumer devices. While some suppliers experienced increased orders, the benefits have been limited to a few companies, leaving most suppliers yet to reap substantial rewards from AI. This wave of AI Edge innovation is akin to past transitions in communication systems (e.g., 4G to 5G). As AI penetrates consumer devices more extensively, it is likely to drive dual growth in product specifications and sales volumes for Taiwan's supply chain. Electronics components industries with diverse applications, such as PCBs, are expected to see significantly greater benefits compared to the previous year.