Source: Davit Kirakosyan
Apple Inc. Cuts iPhone 16 Production Orders Amid Weak Demand
Apple Inc. (NASDAQ:AAPL), the tech giant known for its innovative products, has reportedly cut its iPhone 16 production orders by an estimated 3 million units for the December quarter, according to the latest data from Barclays analysts. This report points to potentially “weak demand” for the company’s latest model, a development that has led to a drop in Apple’s share prices by over 3% intra-day today.
This move, if confirmed, would mark one of the earliest production cuts the company has made in recent years, signifying a possible downturn in demand for its flagship product. Analysts from Barclays observed a 15% year-over-year decline in global iPhone 16 sales during the initial week of availability, based on their sell-through checks.
Reduced Wait Times Indicate Softer Demand
Additional data gathered by the analysts show shorter wait times across key global markets, signaling softer demand for the iPhone 16 compared to its predecessor. Notably, the reduced wait times were especially prominent in the U.S. and China, suggesting that demand is not meeting Apple’s expectations.
This is despite last year’s supply chain issues that extended lead times for the iPhone 15 Pro models. The analysts believe these data points underscore a weaker-than-anticipated consumer interest in the iPhone 16.
Barclays Maintains Underweight Rating on Apple
Despite the current situation, Barclays continues to maintain an Underweight rating on Apple, citing several challenges the tech behemoth is facing. These include softer consumer spending, macroeconomic headwinds, and a rise in competition from other players in the tech industry.
Another potential obstacle is the delayed rollout of Apple Intelligence, especially for the Chinese language, which is not expected to be available until 2025. This delay could further temper demand in China, a key market for Apple’s products. Europe is also expected to experience a staggered launch of these AI features through 2025, which could limit the device’s appeal in the region.
Barclays’ Forecast for the September Quarter
For the September quarter, Barclays projects iPhone sales to hit 51 million units, aligning with both consensus and their own estimates. This forecast accounts for additional sales days due to the earlier release of the iPhone 16, though analysts note that this factor is already well-known within the market.
Increased Risk in the December Quarter
Looking ahead, Barclays cautions that the December quarter could face increased risk if sales continue to underperform. This could be particularly due to the staggered rollout of Apple Intelligence, slow AI adoption outside the U.S., and limited hardware differentiation in the iPhone 16.
In conclusion, while Apple Inc. remains a crucial player in the tech industry, it may face some significant hurdles in the coming months. The company’s decision to cut iPhone 16 production orders by around 3 million units for the December quarter suggests a possible slowdown in demand for its latest product, a trend that will undoubtedly be closely watched by investors and analysts alike.