Renowned Apple analyst Ming-Chi Kuo from Tianfeng International recently reported that Apple (AAPL, Financial) is set to cut production of its iPhone 16 series by approximately 10 million units between the fourth quarter of 2024 and the first half of 2025. The majority of the cuts will affect the non-Pro models. As a result, iPhone 16 production for Q2 2024 is expected to drop to around 84 million units.
Kuo noted that Apple's iPhone revenue for the current quarter might not fully reflect the production cuts. This is because the production and sales gap for iPhones was larger in the same quarter last year, coupled with a more favorable product mix this year, especially with the increased production of Pro Max models during September and October. However, Apple is likely to face revenue pressure in the first quarter of next year due to a year-on-year decline in total shipments and a deteriorating product mix with the launch of SE4.
Despite some market participants betting on Apple Intelligence to significantly boost iPhone shipments in the short term, the recent production cuts may indicate that such optimistic expectations are unlikely to materialize in the near future. Kuo remains positive about Apple's potential success with AI on devices and believes Apple Intelligence could become a popular paid service in the long term. However, significant growth in iPhone shipments may require further hardware innovations.
