The argument around demand for Apple’s latest iPhones continues to rage. The latest update is a bearish assessment from influential Taiwan-based analyst Ming-Chi Kuo of TF International Securities.
China is one of Apple’s biggest markets but it doesn’t currently plan to roll out its artificial-intelligence features in the country.
Apple has cut its cut orders to suppliers for the iPhone 16 by about 10 million units for the fourth quarter of this year and the first half of 2025,accordingto Kuo.
Apple didn’t immediately respond to a request for comment early on Thursday.
Demand for the new iPhone 16 has been a subject of hot debate among analysts, who are trying to gauge whether the integration of artificial intelligence is attracting customers. Just this week, analysts at UBS noted they expect iPhone unit sales in the September quarter to be flat from the same time a year ago, while J.P. Morgan analysts said they see demand in line with the iPhone 15 based on delivery times.
Kuo’s assessment—which is based on his analysis of the company’s supply chain rather than sales—looks more downbeat. He now forecasts Apple partners will produce 80 million iPhones during the fourth quarter, down from around 84 million last year. He estimates production of 45 million units during the first quarter of 2025 and 39 million units during the second quarter—down from 48 million and 41 million, respectively.
The effect on sales might not be so pronounced in the short term as Kuo said the cuts are largely due to production of the cheaper non-Pro models. However, he said he expects iPhone revenue to come under pressure in the first half of 2025.
“I believe that Apple is best positioned to succeed in on-device AI, and I am confident about the long-term potential for Apple Intelligence to become a popular paid service,” Kuo said. “However, significant growth in iPhone shipments will likely require further hardware innovation to accompany this AI development.”
Apple CEO Tim Cook met with Chinese officials in Beijing on Wednesday. They discussed the company’s development in China, network data security and cloud services, according to a ministry statement. But it would be surprising if Cook didn’t take the chance to press for Beijing to allow Apple Intelligence—the company’s AI brand—to launch in China.
Apple shares were down 0.4% in early trading on Thursday after falling 2.2% the previous day.
The Consumer Financial Protection Bureau on Wednesday ordered Apple to pay a $25 million penalty over what it described as failures pertaining to its credit-card partnership with Goldman Sachs, which was ordered to pay nearly $65 million.
The CFPB said Apple failed to send tens of thousands of consumer disputes of Apple Card transactions to Goldman—and that when Apple did send disputes to Goldman the bank didn’t follow federal requirements for investigating them.