Investing.com — Apple Inc (NASDAQ:) may have cut its iPhone 16 production orders by about 3 million units from a major semiconductor components supplier for the December quarter, Barclays analysts said on Tuesday, indicating “weak demand” to the latest model.
Apple shares fell more than 3% after the market opened.
If confirmed, it would be “the first budget cut in recent history,” analysts noted.
“Our sell-through checks indicate a 15% year-over-year decline for the global iPhone 16 in the first week of sales,” they continued. “We also monitored iPhone availability across all regions worldwide, which suggests demand for IP16 is weaker than last year.”
In addition, waiting times in the major regions were significantly shorter than last year.
“Although supply chain restrictions on IP15 pro models extended lead times last year, this nevertheless points to potentially weaker than expected demand, especially in the US and China. All the above data points to weaker demand than previously expected,” analysts noted
Barclays maintains an Underweight (UW) rating on Apple shares, citing a mix of negative factors including weaker consumer spending, macroeconomic pressures and increased competition.
Additionally, the delayed rollout of Apple Intelligence, especially in the Chinese language not expected until 2025, could dampen enthusiasm for the iPhone 16 in China, a key market for Apple. Europe is also expected to see a staggered launch of the new AI features through 2025, potentially limiting the appeal of the new device.
Barclays expects iPhone unit sales for the September quarter to reach 51 million, matching both consensus and Barclays’ own estimates. This projection assumes some channel filling, which may benefit from more sales days compared to last year.
The earlier launch of the iPhone 16 adds two sales days to the September quarter, but analysts say this factor is already common knowledge.
Nevertheless, the December quarter appears “increasingly at risk” from recent order cuts if sell-through remains disappointing, Barclays notes, due to the “staggered rollout of Apple Intelligence, limited AI adoption outside the US and lack of hardware differentiation.” ”
The investment bank said it will continue to monitor iPhone 16 sell-through data, lead-time dynamics and customer feedback on Apple Intelligence following the October rollout.
In addition, Citi analysts have revised their iPhone unit forecasts for the September and December quarters, cutting them by 2 million each, bringing the expected total for iPhone 16 units this year to 83 million. However, they have increased their forecasts for iPhone shipments in March and June 2025 by 4 million and 7 million respectively.
Citi now expects iPhone shipments for calendar years 2024 and 2025 to be 224 million and 246 million, reflecting year-over-year changes of -3% and +9%.
“With Apple Intelligence launching in the US later in October and the major Siri update likely next year, we continue to believe the iPhone refresh will happen in 2025 with iPhone 17
launch,” said the bank’s analysts.
“We believe the overall shorter lead times for the iPhone 16 series are a combination of better offerings, and more importantly, consumers are likely waiting to see how Apple Intelligence will impact their daily interactions with their phones before upgrading.”
Based on these adjustments, Citi also revised its estimates for fiscal year 2024 (FY24), FY25 and FY26 by -9%, +1% and 0%, respectively. The company maintained a buy rating and $255 price target on Apple stock.
