Apple Inc (NASDAQ:AAPL) may have cut iPhone 16 production orders by about 3 million units at a key semiconductor component supplier for the December quarter, Barclays analysts said on Tuesday, suggesting “weak demand” for the newest model .
Apple shares fell more than 1% in pre-conference trading.
If confirmed, this would mark “the earliest manufacturing decline in recent history,” analysts noted.
“Our sales checks show a 15% year-over-year decline for the global iPhone 16 in the first week of sales,” they continued. “We also tracked iPhone availability in all geographies globally, which suggests softer demand for IP16 compared to last year.”
Additionally, wait times across all major geographies were significantly shorter compared to last year.
“Although supply chain constraints for IP15 professional models extended wait times last year, it nevertheless indicates possibly weaker than expected demand, particularly in the US and China. All the above data points to softer demand than previously expected,” analysts noted
Barclays maintains an Underweight (UW) rating on Apple stock, citing a mix of negative factors including weaker consumer spending, macroeconomic pressures and increased competition.
In addition, the delayed development of Apple Intelligence, particularly in the Chinese language that is 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 rollout of new AI features through 2025, potentially limiting the appeal of the new device.
Barclays forecast iPhone unit sales for the September quarter to reach 51 million, in line with both the consensus and Barclays’ own estimates. This forecast assumes some channel filling, possibly benefiting from more selling days compared to last year.
The earlier release of the iPhone 16 adds two days of sales to the September quarter, but analysts say that factor is already widely known.
Still, the December quarter looks “increasingly at risk” with recent order cuts if sales continue to be subdued, Barclays notes, due to the “staggering rollout of Apple Intelligence, limited adoption of AI outside of USA and the lack of material differentiation”.
The investment bank said it will continue to monitor iPhone 16 sales data, delivery time dynamics and customer feedback on Apple Intelligence after its October deployment.
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Reference;
Karaahmetovic, V. (2024) Apple stock falls as Barclays says iPhone 16 experiencing ‘weak demand’ By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/apple-stock-falls-as-barclays-says-iphone-16-experiencing-weak-demand-3642629 (Accessed: 1 October 2024).
