Apple Stock Dips as Barclays Reports Weak Demand for iPhone 16

Apple stock falls as Barclays says iPhone 16 experiencing 'weak demand' By Investing.com

Investing.com -- Apple Inc (NASDAQ:AAPL) may have reduced its iPhone 16 production orders by approximately 3 million units at a key semiconductor component supplier for the December quarter, Barclays (LON:BARC) analysts said Tuesday, suggesting "weak demand" for the newest model. Apple shares fell more than 1% in premarket trading. If confirmed, this would mark "the earliest build cut in recent history," analysts noted. "Our sell-through checks point to 15% declines Y/Y for global iPhone 16 in the first week of sales," they continued. "We also tracked iPhone availability across geographies globally, which suggests softer demand for IP16 relative to last year." Moreover, wait times across major geographies were significantly shorter compared to last year. "While the supply chain constraints on IP15 pro models extended lead times last year, it nevertheless points to potentially weaker-than-expected demand, especially across US and China. All of the above data points point to softer demand than previously anticipated," analysts remarked Barclays maintains an Underweight (UW) rating on Apple's stock, citing a mix of negative factors such as weaker consumer spending, macroeconomic pressures, and increased competition. Furthermore, the delayed rollout of Apple Intelligence, particularly in the Chinese language not expected until 2025, may dampen enthusiasm for the iPhone 16 in China, a key market for Apple. Europe is also expected to experience a staggered launch of the new AI features through 2025, potentially limiting the new device's appeal. Barclays projects iPhone unit sales for the September quarter to reach 51 million, matching both consensus and Barclays' own estimates. This projection assumes some channel fill, potentially benefiting from more selling days compared to last year. The earlier launch of the iPhone 16 adds two days of sales to the September quarter, but analysts say that this factor is already widely known. Nevertheless, the December quarter appears to be "increasingly at risk" with the recent order cuts if sell-throughs continue to be underwhelming, Barclays notes, due to "staggered roll-out of Apple Intelligence, limited adoption of AI outside of the US and lack of hardware differentiation." The investment bank said they will continue to monitor iPhone 16 sell-through data, lead time dynamics, and customer feedback on Apple Intelligence following its rollout in October.

Apple cuts iPhone 16 orders at key supplier, Barclays claims - 9to5Mac

In a new investor note seen by 9to5Mac today, analysts at Barclays report that Apple "may have just cut" iPhone 16 production by three million units. Based "recent supply channel checks," the analysts say that these cuts were made at a "key semiconductor component" for iPhone orders through the December quarter. Barclays says that its "sell-through checks" suggest a 15% decline year-over-year for the iPhone 16 launch. For the September quarter, Barclays believes that iPhone shipments are on track for 51 million units, covering the months of July, August, and September. The report notes that the iPhone 16 has two additional days of sell-through this year than the iPhone 15 last year (nine days last year versus 11 days this year). The December quarter, however, "looks increasingly at risk" for iPhone shipments due to the recent order cuts. Barclays analysts also site the "staggered rollout of Apple Intelligence," the "limited adoption of AI outside of the US," and the "lack of hardware differentiation" as reasons for the iPhone 16 demand issues. We think Sep-Q iPhone units are on track for 51M as the best case (consensus and Barclays both at 51M for Sep-Q estimate), assuming some channel fill in line or better vs. last year due to more selling days. We believe July and August sell-through has been flattish Y/Y. I'm hesitant to put much too much stock into this report from Barclays, primarily because of the emphasis on lead times. Much of the Barclays analysis is based on the fact that "wait times across major geos we tracked were much shorter" for the iPhone 16 compared to the iPhone 15 last year. I'm of the opinion that order times don't do a great job of representing iPhone demand. There are so many factors that contribute to these numbers that I don't think you can use them as a primary reason for iPhone demand being strong or weak in a particular year. Still, it is notable that Barclays analysis suggests Apple cut three million units at a "key Taiwanese supplier." Apple will report its fiscal Q4 2024 earnings in early November, followed by its fiscal Q1 2025 earnings in early February.