Analyst Questions iPhone 16 AI-Driven Sales Boost Expectations

iPhone16 Projections Questioned: Ming-Chi Kuo Says Expecting Apple Intelligence To Drive Sales 'May Be Too Optimistic' - Apple (NASDAQ:AAPL)

Top analyst Ming-Chi Kuo has cast doubt on the anticipated surge in Apple Inc.'s AAPL upcoming smartphone series, iPhone 16 sales. What Happened: On Thursday, Kuo, an analyst at TF Securities stated that Apple has not ramped up its iPhone 16 orders, contrary to certain reports. His latest observation came after the latest earnings reports from Apple suppliers TSMC and Largan. Neither TSMC nor Largan have reported an increase in unit growth, and Largan's orders for high-end models in 2024 are on par with those of the previous year, according to Kuo. Kuo estimates that Apple's iPhone 16 orders for the second half of 2024 are around 87 million units, lower than the 91 million iPhone 15 units ordered in 2023. See Also: Days After Elon Musk Deemed University Of Tokyo's Idea 'Pointless,' Scientists Develop Smiling Robot With Living Skin While some suppliers may have been asked to increase production, Kuo suggests this could be due to "specific reasons within individual industries or components." He also expressed doubt over the belief that the new Apple Intelligence feature will significantly drive iPhone 16 sales. "Regardless of whether Apple Intelligence alone can drive replacement demand (which is another big topic), the expectation that consumers will buy the new iPhone 16 for the Beta version of Apple Intelligence in 2H24 may be too optimistic," Kuo stated. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: The iPhone 16 series was expected to trigger an AI-driven upgrade "supercycle." Kuo previously also said that the upcoming smartphone series may not come with significant hardware changes. Apple was reportedly counting on AI services to fuel demand for its new lineup after a challenging 2023. The company aimed to ship at least 90 million iPhone 16 devices in the latter half of this year, targeting about 10% growth in shipments of new iPhones compared with their predecessors. Image via Shutterstock Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Microsoft's 'iPhone Moment'? Wedbush Analyst Dan Ives Expects AI To Add $1 Trillion To Valuation Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

Kuo: Expectation That Apple Intelligence Will Drive iPhone 16 Sales 'May Be Too Optimistic'

Apple does not appear to have increased iPhone 16 orders despite reports to the contrary, according to Apple analyst Ming-Chi Kuo. Kuo cites recent earnings reports from Apple suppliers TSMC and Largan as evidence. TSMC recently said that it did not see an increase in unit growth, while Largan said that orders for high-end models in 2024 are similar to last year. Kuo believes that Apple's iPhone 16 orders for the second half of 2024 are around 87 million units, which is lower than the 91 million iPhone 15 units that Apple ordered in 2023. Kuo said that certain suppliers may have been asked to increase production, but that may be related to "specific reasons within individual industries or components." He suggests that expectations that Apple Intelligence will drive iPhone 16 sales "may be too optimistic" as the feature is available in U.S. English only. The launch of Apple Intelligence is generally considered to be the reason for the increase in iPhone 16 orders. However, Apple Intelligence will only be available in Beta for US users in 2H24, and Apple Intelligence Siri only supports English. Regardless of whether Apple Intelligence alone can drive replacement demand (which is another big topic), the expectation that consumers will buy the new iPhone 16 for the Beta version of Apple Intelligence in 2H24 may be too optimistic. Earlier this month, Bloomberg suggested that Apple was counting on the iOS 18 AI features to boost iPhone shipments by 10 percent in 2024. Apple Intelligence requires an iPhone 15 Pro or later, so customers with an older iPhone will need to upgrade to the iPhone 16 to get the technology. Apple Intelligence includes a long list of new capabilities, including Writing Tools for proofreading, polishing, and summarizing text, Image Playground for generating images, and Genmoji for creating custom emoji. Apple Intelligence will also be used to overhaul Siri, but the new Siri functionality isn't slated to launch until 2025. So far, Apple has not established an AI deal for Chinese consumers, and Apple Intelligence will also not be coming to the European Union when iOS 18 launches.

iPhone 16 may not see super cycle after all, according to analyst report | AppleInsider

Earnings calls from key iPhone suppliers suggest iPhone 16 isn't being ordered in any greater quantity than iPhone 15, bringing the rumored Apple Intelligence spurred super cycle into question. Analysts have been connecting the dots since WWDC to suggest iPhone 16 could drive significant sales due to Apple Intelligence demand. However, the speculation isn't allegedly being reflected in parts orders from key suppliers. A new post from long-time supply chain analyst and Apple leaker Ming-Chi Kuo says Largan and TSMC commented on part demand during their earnings calls. Both said they hadn't seen a demand spike that would indicate an upcoming iPhone super cycle. In fact, Kuo says orders for iPhone 16 units at 87 million units for the second half of 2024 haven't surpassed iPhone 15 orders at 91 million units for the same time period in 2023. Parts manufacturers have seen consistent orders. A previous industry report suggested that Apple wouldn't release many Apple Intelligence features until early 2025. So, it seems unlikely that demand would spike in the fall thanks to an iPhone feature that isn't widely available outside of betas. The iPhone 15 Pro and iPhone 15 Pro Max are the only existing iPhones that can run Apple Intelligence. It is believed that the entire iPhone 16 lineup will be able to run Apple's AI, driving sales. However, without an Apple Intelligence launch in the fall, demand isn't expected to change. Given supply chain orders, at least according to Kuo, it seems Apple isn't planning for a super cycle either.

Kuo: Apple may not increase iPhone 16 orders after all - 9to5Mac

Apple and its various suppliers are busy prepping the iPhone 16 for its fall debut. But despite recent reporting that Apple was planning for a big increase in its 2024 iPhone shipments, today Ming-Chi Kuo has cast doubt on those claims. Ming-Chi Kuo writes on Medium: Although there have been rumors of increased orders for iPhone 16 orders from time to time after WWDC, recent earnings calls from two key Apple suppliers (TSMC and Largan) have hinted that the iPhone 16 orders may not have increased. My understanding is that some suppliers have seen an increase in iPhone 16 orders for 2H24, but from the EMS/assembly perspective, the iPhone 16 orders for 2H24 have not seen much change (about 87 million units), still slightly lower than the 2H23 iPhone 15 orders (about 91 million units). It seems that Apple's iPhone 16 expectations might be about in line with its iPhone 15 shipments last year -- with no big increase as expected. This is simply Kuo drawing a conclusion based on what these two Apple suppliers have reported, but it's noteworthy data nonetheless. TSMC especially would have been impacted by the reported 10% increase in units ordered by Apple. So if it hasn't seen a noteworthy change from original expectations, perhaps those prior reports have been incorrect. Largan's statement doesn't quite carry as much weight to it, as it appears focused solely on the high-end Pro models. Even if the iPhone 16 Pro and Pro Max are expected to sell in similar quantities to last year's Pro models, that still leaves room for an expected boost in the base iPhone 16. As we have reported previously, the entire iPhone 16 lineup is expected to receive the new A18 chip. This will be a key marketing pitch for users interested in Apple Intelligence features, since last year's base iPhone 15 won't support AI. A powerful new chip with Apple Intelligence support could still prove a compelling reason to upgrade for many customers, especially if they can do so with the lower-priced iPhone 16. The fall will be here soon, so we won't have to wait too long to see what Apple has in store.

Apple Forced Into Risky AI Gamble With iPhone 16 Pro

With demand for Apple's iPhone slowing down, how will Tim Cook and his team lure consumers to its ecosystem? Data from analysts CIRP show that demand for the iPhone -- specifically the current iPhone 15 model -- is lower than that of the iPhone 14 in this quarter. This echoes the pattern of lower demand seen in Q1 2024. The report also highlights one way Apple is hoping to turn around sales. But it's a gamble that asks for patience from the fickle smartphone market. Apple will be looking towards one key factor in the iPhone 15 family, which is already accelerating Android sales. Generative AI has transformed the view of what a smartphone can offer consumers, from editing photos and videos, through summarising and analysis of text and images, to assisting creativity. Following the announcement of Apple's AI plans at June's Worldwide Developer Conference, shares in the company rose seven percent, primarily on the promise of increased iPhone sales. Because of the high demands generative AI places on hardware and Apple's push to process as much user data on the user's device as possible, Apple Intelligence will only run on one existing iPhone model -- the iPhone 15 Pro Max. Consumers without the most expensive iPhone on the market will need to buy the latest iPhone hardware to access the A18 Pro chip specifically designed to support generative AI routines. Yet the AI that the iPhone is clearly lacking right now will not be available until the first quarter of 2025. Tim Cook and his team will be asking the Apple faithful to buy the smartphone on the promise of receiving the AI at some point in the future. Meanwhile, all of those benefits are available on Android and have been since Google introduced the idea of an AI-first smartphone in October 2024 during the Pixel 8 launch. With Google's Pixel 9 family due to be announced in August, Apple's iPhone will be two generations behind Android's AI efforts before it has even left the Cupertino stage. Will consumers be happy to wait for Apple to catch up to the competition, or will they decide that the AI revolution cannot wait? If it's the former, then Apple's decision to "go long" should help revitalise sales of the iPhone. But if it's the latter, the Android ecosystem may have just found Tim Cook's Achilles heel.