Noted Apple analyst Ming-Chi Kuo has once again suggested a cautious outlook for iPhone demand, specifically for the upcoming iPhone 16 series. In his latest report, Kuo claims Apple has cut iPhone 16 orders by around 10 million units, primarily impacting non-Pro models. He estimates that iPhone production for the latter half of 2024 will be about 84 million units, a dip from his initial forecast of 88 million. Kuo believes this shift indicates Apple’s tempered expectations for the iPhone 16, though he emphasizes that production adjustments are common and can reflect a variety of strategic supply chain decisions.
One major factor influencing iPhone demand, Kuo suggests, is the rollout of Apple Intelligence—a new on-device AI system. While Apple Intelligence has the potential to set Apple apart in the AI space, Kuo cautions that it may not generate immediate demand for the iPhone 16. He explains that Apple may need further hardware innovation to boost sales and meet high consumer expectations, even though he is optimistic about Apple Intelligence’s long-term success and possible evolution into a paid service.
In the U.S., initial iPhone 16 sales have reportedly underwhelmed, though demand in China has remained strong, especially for Pro models, which historically outperform standard versions. Apple’s favorable mix of high-end Pro and Pro Max models during this launch could still balance out revenue in Q4, says Kuo, even with lower non-Pro sales.
Looking ahead, Kuo predicts Apple’s iPhone revenue will see another shift with the release of the iPhone SE 4 in early 2025. He expects the iPhone SE 4, which is also likely to support Apple Intelligence, to be a popular choice among budget-conscious consumers. However, its success may put pressure on Apple’s revenue due to the lower price point of the SE line.
Kuo’s predictions, derived from supply chain surveys and industry analysis, highlight the potential challenges Apple may face with its iPhone lineup, even with major AI advancements. The company's Q4 earnings, due on October 31, will shed light on how iPhone sales and the Apple Intelligence rollout are performing in real terms.