Apple Boosts iPhone 16 Production, Betting on AI Features to Drive Demand

iPhone 16 Supply Reportedly Increased By 10 Percent Compared To The iPhone 15, But Analyst Claims Apple Intelligence Will Not Be A Major Contributor

The iPhone 16 lineup will be a part of Apple's announcements during the 'It's Glowtime' event that is scheduled to be held on September 9. Thanks to a multitude of upgrades expected to arrive with the newer models, including support for Apple Intelligence, the technology giant likely believes that these will be the catalyst for increased demand, which is why a new report estimates that the iPhone 16 supply has increased by 10 percent compared to the iPhone 15 series from last year. A report from Nikkei Asia mentions that Apple has ordered its suppliers to increase iPhone 16 supply to between 88 million to 90 million units. This is not the first time that the Cupertino firm has been reported to be eyeing a 90-million shipment target for 2024, as Bloomberg previously made this estimate. China will likely account for the majority of this initial shipment, but the report mentions that the region will be more challenging for Apple to dominate thanks to Huawei's resurgence. Furthermore, Jeff Pu, managing director of Haitong Securities, also implies that Apple Intelligence will not be a huge selling point for any of these iPhone 16 models. Instead, he believes that 2025 will bring more opportunities for Apple as it can expand on its generative AI features. However, various analyses earlier concluded that Samsung's Galaxy AI was paramount in customers upgrading to the Galaxy S25 models in droves, so we will continue to wait and see how true this prediction is. "We anticipate a relatively modest recovery this year. Apple Intelligence features, while promising, may not deliver groundbreaking advancements in 2024. We believe that 2025 could be a more significant year as the broader AI ecosystem matures." As for what customers have highlighted as the primary reason to upgrade to any iPhone 16, Apple Intelligence was not at the top of their list, with a survey revealing that a competitive price and a capable cooling solution were their main preferences. However, remember that just like the iPhone 15 Pro and iPhone 15 Pro Max, all iPhone 16 models are rumored to ship with 8GB RAM as standard, which might not be sufficient. For those wanting to skip the upcoming generation, you will be pleased to learn that the iPhone 17 lineup is said to arrive with 12GB RAM, opening a ton of doors for generative AI-related functions.

Apple Intelligence Will Play 'Starring Role' In iPhone 16 Launch, Says Analyst: No Price Hike Expected, But Accelerating Replacement Cycle 'Key Factor' For The Stock - Apple (NASDAQ:AAPL)

The analyst expects the iPhone 16 to make up 68% of Apple's fiscal year 2025 iPhone shipments. Apple Inc.'s AAPL all-important hardware launch event for the year, dubbed Glowtime, has been scheduled for Monday, Sept. 9, and will be held at the Steve Jobs Theater in Cupertino. An analyst at Morgan Stanley on Thursday offered his take on what to expect from the event. Stock Implications: Apple shares will likely perform In line with the typicality of the iPhone launch event, when they underperform the market (by about 60 basis points) on launch day and then merely modestly outperform the market (by 3 basis points on the average) in the three months following the event, said analyst Erik Woodring in a note. That said, the analyst did not rule out of the possibility the stock performing better than historical seasonality, given his expectations that the iPhone 16 and Apple Intelligence will likely unlock pent-up demand. He estimates that the iPhone's upgradable base is currently 40% larger than ahead of the 5G cycle. The iPhone replacement cycle, which currently has a peak value of 4.8 years, will likely accelerate, he said, saying it is the "key factor" for the Apple stock being a top pick. Typically, Apple shares underperform when replacement cycles contract and underperform when replacement cycles are elongated, Woodring said. This, the analyst, said creates a positive setup as he sees a contraction in iPhone replacement cycles through 2026 ahead. See Also: How To Buy Apple (AAPL) Stock What's In Store: Woodring expects Apple to launch the iPhone 16 family, new Apple Watch models, Series X and Ultra 3, and potentially new AirPods. For the flagship iPhones, the analyst looks forward to: Catch-up upgrades for the iPhone 16 and iPhone 16 Plus, and the addition of an Action button More pronounced component upgrades for iPhone 16 Pro and Pro Max such as Thinner bezels. Larger display and slightly larger form factor. A periscope lens for iPhone 16 Pro. New, faster A18 Pro chipset, potentially having more neural engine cores for enhanced AI capabilities. Improved battery capacity, and a metal casing to improve heat dissipation. The upcoming iPhone 16 will likely add the Capture button across the lineup, which would act like a shutter button on a digital camera, Woodring said. The analyst expects preorders to start Friday, Sept. 13, with in-store availability/shipments, beginning on Friday, Sept. 20. 3 Focus Areas: Woodring said he would focus on three aspects, namely the iPhone pricing, iPhone battery life, and any new Apple Intelligence features. Apple will likely price all iPhone 16 models the same as their like-for-like iPhone 15 counterparts, Woodring said. The analyst, however, expects Apple to eliminate the 128GB iPhone Pro SKU, priced at $999. This will render the starting price of the iPhone 16 Pro at $1,099. The analyst expects the iPhone 16 to make up 68% of Apple's fiscal year 2025 iPhone shipments, up from the 66% that the iPhone 15 accounted for in the previous year. He estimates the iPhone's average selling price to rise 5% year-over-year in 2025. Citing Morgan Stanley's sensitivity analysis using different pricing/mix factors, every 1% increase in the iPhone ASP will translate to 3 cents per share earnings per share upside in 2025. Citing reports, Woodring said Apple will likely bring a new and about 10% larger capacity battery to the iPhone 16 Pro/Pro Max. This is important considering the amount of computing power Apple's on-device LLMs will likely use, he said. "We believe a strong battery upgrade can help to drive old device refreshes, given battery life is one of the key reasons users historically upgrade," he said, adding that every 1% increase in iPhone shipments will equate to about 50-basis-point earnings per share upside in 2025. Apple Intelligence will likely play a "starring role in the iPhone 16 launch event, with 'Glowtime' almost certainly a reference to the new Siri user interface in iOS18," said Woodring. That said, he expects Apple Intelligence feature introductions to be staggered through this Fall. "The more that Apple teases the performance of Apple Intelligence on the new iPhone 16 models with 8GB of DRAM and a more powerful processor, the greater the odds of consumers associating Apple Intelligence with needing a new iPhone," he said. Potential Wildcards: Although Morgan Stanley currently factors in status quo prices, Apple could spring a surprise by raising the new iPhone prices, said Woodring. The year-over-year price increases could prove to be a net negative for Apple, as it would lead some upgraders to extend the useful life of their iPhone for another year, he said. The new Apple Intelligence features, or new language support, are also key wildcards to watch for, the analyst said. He is skeptical about the AirPods Pro 3 launch at the event, given the company's Wearables, Home and Accessories segment has underperformed the rest Woodring also mentioned the aggressiveness of wireless carriers for the new iPhone launch and year-over-year changes in trade-in values, given the limited backward compatibility of Apple Intelligence, as wildcards. Morgan Stanley has an Overweight rating and a $273 price target for the stock. Price Action: Apple ended Thursday's session up 1.46% at $229.79, according to Benzinga Pro data. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Apple Will Pursue 'Aggressive And No Holds Barred Strategy Around AI,' Says Bullish Analyst: 'Worst Is In Rearview Mirror' Photo courtesy: Apple Market News and Data brought to you by Benzinga APIs

iPhone 16 And Apple Intelligence Will Lead The Way For GenAI Devices To Bring The Smartphone Market Out Of Its Ongoing Slump

Apple will announce the new iPhone 16 lineup on September 9 which will come packed with the company's new AI features that will not be available on older models. While Apple Intelligence is still new, the company is potentially preparing new AI features, which it can charge for, but speculations regarding the matter are scarce at this stage. Apple Intelligence and the iPhone 16 conjoined could boost the AI smartphone market, as per the latest report. Apple Intelligence was previously reported to have no impact on the sales of the iPhone 16 lineup, but if Apple introduces new solid front-facing additions, the trajectory could see an upward trend. So far, it all boils down to the company's plans to introduce dedicated features for the iPhone 16 lineup. Even if the company does not, Apple Intelligence and the iPhone 16 could lead the way for the AI smartphone market next year. There is no doubt that Apple's AI features will boost sales for the company in the latter half of this year, as some reports have suggested a 10 percent year-over-year growth. According to a new Counterpoint Research, the wide adoption of generative AI focus will drive growth for the entire smartphone market. While the entire industry could see noticeable growth, it could be a major jump for Apple in terms of overall shipments. The report mentions that global smartphone shipments will see an upward trend after two years of decline, with a forecast of 1.23 billion units, suggesting a total of 5 percent growth for the smartphone industry. For 2025, the report further elaborates that the industry would grow another 3 percent and Apple will play a major role in this regard. Senior analyst Harmeet Singh Walia states, "The share of GenAI-capable smartphones is expected to go from less than a fifth in 2024 to more than half in 2028." Apple Intelligence is particularly something that the industry should thank as it will generate growth for all GenAI devices." Furthermore, "It could create an opportunity for Apple to rise to the top in annual shipments as soon as in 2025." The report also claims that Apple will step into the foldable category in 2027, introducing its first foldable iPhone, which could boost revenue for the company and further act as the catalyst to boost the foldable smartphone market. It remains to be seen how Apple Intelligence and the iPhone 16 lineup perform in the real world, as the company is scheduled to host the "It's Glowtime" event next month. The company also plans to announce the new Apple Watch Series 10 with a significant redesign that users have been wanting for a while. Do you think Apple will lead the way for future GenAI devices in the industry?

Apple Ramps Up iPhone 16 Orders By Over 10% Ahead Of September Launch, Anticipating Surge In Demand Thanks To AI: Report - Apple (NASDAQ:AAPL)

Ahead of the highly anticipated launch of its artificial intelligence-equipped iPhones, Apple Inc. AAPL has reportedly increased its orders for new iPhones, signaling strong confidence in its upcoming products. What Happened: Apple has instructed suppliers to prepare components for approximately 88 million to 90 million new iPhones, reported Nikkei Asia on Thursday, citing multiple sources familiar with the plan. The tech giant is gearing up for the launch of its first AI-equipped iPhones on Sept. 9. This year's orders surpass last year's initial component orders of around 80 million units of the iPhone 15 series. Some suppliers reported receiving orders for over 90 million units. However, they noted that Apple typically places higher initial orders and adjusts them post-launch. Despite the strong orders, Apple faces stiff competition in China, which accounted for 17% of its revenue in the first quarter. Huawei Technologies has recently overtaken Apple in the Chinese market. Additionally, Apple is navigating geopolitical tensions between the U.S. and China, with the Chinese Ministry of Foreign Affairs raising safety concerns about iPhones. Jeff Pu, managing director of Haitong Securities, forecasts about 88 million new iPhone shipments this year but does not expect a "supercycle." He believes 2025 could be more significant as the AI ecosystem matures. Apple did not immediately respond to Benzinga's request for comment. See Also: Apple September 9 'Glowtime' Event: Here's Everything Cupertino Is Expected To Launch Why It Matters: The increased orders for the new AI-enabled iPhones come amid a series of strategic moves by Apple. On Tuesday, analyst Daniel Ives of Wedbush highlighted that the upcoming iPhone launch could trigger Apple's biggest upgrade cycle in history. Ives emphasized that the AI technology integrated into these new models could drive a significant growth phase for Apple. "This starts a historical period... 25% of the world based on our estimates will ultimately access AI through an iPhone," he said in an interview. Moreover, IDC's market update suggested that global smartphone shipments are expected to rise by 5.8% in 2024. This recovery is anticipated to benefit Apple, especially with the introduction of generative AI capabilities in its new models. However, the company is also facing challenges. On Wednesday, reports surfaced that Apple laid off about 100 employees from its services division, indicating internal restructuring efforts. Additionally, renowned analyst Ming-Chi Kuo noted that the iPhone 17 Pro Max, set for a 2025 release, will feature enhanced AI capabilities, which could be a major selling point. Price Action: Apple's shares were up 0.94% in premarket trading on Thursday, after closing at $226.49 on Wednesday. Apple's stock is up 22% year-to-date, according to Benzinga Pro data. Read Next: Everything We Know About Apple's iPhone 16 Image Via Shutterstock This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote Market News and Data brought to you by Benzinga APIs