iPhone 16 Sales Forecast: Production Cuts Loom, Can AppleIntelligence Turn the Tide?

iPhone 16 Sales Forecast: Production Cuts Loom, Can AppleIntelligence Turn the Tide?Apple released the iPhone 16 and iPhone 16 Pro last month, with institutions previously anticipating strong sales for both devices. The speculation attributed the upward trend partly to the inclusion of the AI feature AppleIntelligence

iPhone 16 Sales Forecast: Production Cuts Loom, Can AppleIntelligence Turn the Tide?

Apple released the iPhone 16 and iPhone 16 Pro last month, with institutions previously anticipating strong sales for both devices. The speculation attributed the upward trend partly to the inclusion of the AI feature AppleIntelligence. However, recent reports suggest a potential production cut for the iPhone 16 later this year, sparking concerns about its future sales.

Barclays analysts released an investor note revealing the market performance of the iPhone 16 and expectations for the device over the next few quarters. The analysts reported that Apple may have just cut iPhone 16 production by 3 million units, with supply chain information coming from semiconductor component manufacturing. Barclays believes these checks point towards a 15% year-over-year drop in iPhone 16 shipments, but performance in the last quarter will be in line with previous expectations. iPhone 16 shipments in September are expected to reach 51 million units.

The report also noted the iPhone 16s two-day increase in selling days compared to the iPhone 15 models. According to information provided in the Barclays report, iPhone 16 shipments in the last quarter of the year (October, November, and December) appear to face significant risks. Analysts also suggest that iPhone 16 shipments in December look increasingly at risk due to Apples production order cuts.

Analysts attribute the lackluster demand to a possible misfire in the promotional strategy for the AppleIntelligence handset. Some users may be hesitant about upgrading to the newest model at this stage, as AppleIntelligence is expected to launch sometime later this month (possibly on the 15th), but the launch date remains uncertain and its features will be rolled out in incremental updates. Additionally, the limited applicability of AppleIntelligence or any AI features outside the US could lead to continued subdued global shipments.

Another factor that could potentially impact the December quarter is the lack of innovation in design, as the Pro models appear nearly identical to the iPhone 15 Pro models from last year. The real-world response to these factors remains to be seen, as it's too early to call the iPhone 16 series a hit or a miss this year.

Despite the challenges posed by production cuts and market demand uncertainty, the iPhone 16 still has the potential to achieve success this year. September quarter sales are projected to reach 51 million units, assuming channel sales are flat or better than last year due to increased selling days. However, the timing and gradual rollout of AppleIntelligence features, along with the lack of design innovation, will be key factors in influencing future sales. Ultimately, the market performance of the iPhone 16 will depend on consumer reception to the new device and how Apple responds to market changes and demand fluctuations.