All you need to do is go to your Branding Editor (cPanel -> Preferences -> Branding Editor), click the "Edit this Style" link below the style you want to edit and then click on Edit UI. Scroll down until you see "Favorite Icon (must be an ico)" and you can upload your Favorite Icon there. Make sure it looks good, then you can go to the Branding Editor's main screen again and apply your custom branding to all your users.
Originally Posted by sequencehosting
Custom themes (which is a totally different system) is completely excessive for this situation. For minor cosmetic modifications, custom themes should not be used due to the issues they generate with updates. You should use custom styles (also known as using the Branding Editor) instead. Your customizations will remain intact regardless of cPanel updates only if you use custom styles (rather than themes).
Anything you replace in the X3 theme itself may be overwritten during the next cPanel update. For something as simple as replacing a favicon, just use custom styles instead.
cPanel Technical Product Specialist