Apple’s shares declined by about 2% on Wednesday following reports from industry supply chain analyst Ming-Chi Kuo that the company has reduced its production orders for the iPhone 16 by approximately 10 million units. This reduction impacts the fourth quarter of 2024 and the first half of 2025. According to Kuo, the production cuts primarily target the standard iPhone 16 models, with the Pro versions—featuring enhanced displays and cameras—remaining more popular among consumers.
Kuo’s revised estimates suggest that iPhone 16 production for the second half of 2024 will now reach 84 million units, a decrease from his previous estimate of 88 million units. He also forecasts Apple’s partners will manufacture around 80 million iPhones in the fourth quarter of 2024, down from 84 million units produced during the same period last year. For the first and second quarters of 2025, Kuo estimates production will drop to 45 million and 39 million units, respectively, compared to prior estimates of 48 million and 41 million.
Kuo expressed concerns about the impact on Apple’s iPhone revenue, particularly during the first half of 2025. He attributed this to a year-on-year decline in shipments and a less favorable product mix, partly driven by the upcoming release of the iPhone SE 4, which he expects to launch in December. The iPhone SE series is typically the most affordable in Apple’s lineup, but the company does not update it every year.
While acknowledging the challenges in iPhone shipment growth, Kuo remains optimistic about Apple’s long-term potential, particularly in the realm of on-device artificial intelligence (AI). He believes Apple is well-positioned to excel in this area and sees Apple Intelligence, the company’s AI platform, as a service with substantial future growth potential.
Apple Intelligence is set to debut as a beta feature next week with the iOS 18.1 update. It will initially be available to users of the latest iPhone 16 models as well as last year’s iPhone 15. The AI-powered features will allow users to summarize text messages, generate automatic responses, and more. Despite near-term pressures, Kuo remains confident that hardware innovations will be needed to fully capitalize on AI’s integration into future iPhones and spur significant growth.
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