TMTPost -- Apple Inc. shares fell as much as around 3.9% before settling nearly 2.8% lower Monday. Apple shares underperformed the market as the U.S. stock benchmark S&P 500 edged up 0.13%, closing out its sixth consecutive winning session. Apple shares sold off as analysts saw initial signs of weak sales of the iPhone maker』s flagship devices of the year.
Credit：Ming-Chi Kuo
"The key factor is the lower-than-expected demand for the iPhone 16 Pro series," concluded Ming-Chi Kuo, an analyst at TF International Securities who is well known for his accurate predictions on future Apple products. Kuo estimated Apple received about 37 million units of iPhone 16 series preorders at the first weekend of sales, decreasing around 12.7% from last yera』s iPhone 15 series first weekend sales.
Another sign of lower-than-expected demand Kuo noted is that the shipment increase before the preorder. The delivery times of the iPhone Pro series are significantly shorter than those of the previous premium version. The significant YoY growth in shipments before pre-order for iPhone 16 Pro Max is due to improved tetraprism camera production yields and Apple』s optimistic outlook for demand for this model, Kuo noted.
One of the key factors resulted in the lower-than-anticipated demand for iPhone 16 Pro series is that the major selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 release, according to Kuo. He added intense competition in the Chinese market continues to impact iPhone demand. Despite the decline in preorders of the iPhone 16 Pro series in the first weekend, Kuo believes Apple still has opportunities to improve sales through the release of Apple Intelligence and peak season promotions, citing the Double 11 event in November in China and the year-end holiday season in America and Europe. Sales during these critical periods will be key points to watch for changes in iPhone demand, Kuo said. If Apple Intelligence releases in the last quarter of this year and peak season promotions have a limited effect on iPhone 16 shipments, Apple will implement more aggressive iPhone product strategies in 2025 to stimulate market demand, Kuo expected.
Analysts from Barclays, J.P. Morgan, Bank of America (BofA) and Jefferies on Monday said that iPhone 16 pre-orders are seeing shorter estimated delivery times than last year's new iPhone series, which could result from factors including both higher U.S. supply and lower demand.
Based on their conversations with distributors and analysis of pre-order figures on major Chinese e-commerce sites, total pre-order units were down year-over-yera (YoY) within the first couple of days, with a lower pro model mix, according to Barclays analysts. 「We heard that pro model units were down double digits on a Y/Y basis, while base and plus models grew Y/Y,」 the analysts wrote in a note. They anticipated Apple Intelligence in the Chinese language would be unavailable 「until CY2025, which may dampen early enthusiasm for IP16. Weak macro and competition continue to weigh on iPhone sales in China.」
In a client note, Samik Chatterjee and other JPMorgan analysts said iPhone 16 Pro preorders were "modestly slower vs. last year." Meanwhile, preorders for the standard iPhone 16 models during the first weekend were in line with last year's iPhone 15 launch, in terms of key markets』 delivery lead times as a demand indicator.
After tracking iPhone ship dates on Apple』s own website and various carrier websites, BofA analysts wrote that ship time 「for the iPhone 16 Pro and Pro Max models are extended, but somewhat less (on average) compared to last year at this point in the pre-order cycle.」
「We cannot rule out that Apple did allocate more supply to the US since Apple Intelligence will be available first there, but it will unlikely be massively more since it still needs to meet usually strong initial demand in other major markets, [including] China," Jefferies analysts wrote. "Even so, it still suggests Apple has overestimated demand in the US for its AI features. That is not good news.」
Apple introduced on Septemnber 9 the new iPhone 16 lineup, built from the ground up for Apple Intelligence, its advanced personal AI system introduced at the Worldwide Developers Conference (WWDC) this year in June. The latest iPhone series feature the faster, more efficient A18 and A18 Pro chips, making these the most advanced and capable iPhone models ever.
Apple is seeking to entice buyers with AI features that are still on the horizon. It said the first set of AI tricks hit devices next month includes Writing Tools, Mail and notifications summaries, a more natural and flexible Siri, the Clean Up tool in Photos. Many more Apple Intelligence features will roll out later this year and in the coming months, including the option to access ChatGPT』s broad world knowledge from several experiences within Apple』s operating systems like iOS 18.
