Apple Inc. (AAPL) shares took a dip Wednesday afternoon after a prominent analyst, Ming-Chi Kuo, released a report revealing a substantial reduction in iPhone 16 orders. Kuo’s report suggests that Apple has slashed orders for the iPhone 16 series by approximately 10 million units, impacting production for the three-quarter period encompassing the fourth quarter of 2024 and the first half of 2025.
Kuo’s industry survey revealed that the order cuts primarily affect the non-Pro iPhone 16 models. Consequently, his revised production forecast for the iPhone 16 in the second half of 2024 stands at 84 million units, down from his initial estimate of 88 million units.
While the initial impact on Apple’s fourth-quarter 2024 revenue may be limited due to a previous mismatch between production and sales figures, Kuo anticipates pressure on iPhone revenue in the first half of 2025 due to the combined effect of year-over-year shipment decline and a less favorable product mix stemming from the launch of the iPhone SE4.
The iPhone SE4, slated for production in December, is projected to generate approximately 8.6 million units from its launch to the end of the first quarter of 2025.
Kuo acknowledges the potential of Apple Intelligence, Apple’s new AI technology, to boost iPhone shipments, but he cautions that the order cuts indicate a short-term delay in this anticipated growth.
“I believe that Apple is best positioned to succeed in on-device AI, and I am confident about the long-term potential for Apple Intelligence to become a popular paid service. However, significant growth in iPhone shipments will likely require further hardware innovation to accompany this AI development,” Kuo stated.
In a separate development, Apple and Goldman Sachs are facing a hefty settlement of over $89 million to resolve an investigation into their joint venture for Apple Card. The Consumer Financial Protection Bureau alleges that Apple and Goldman “illegally sidestepped” their legal obligations towards Apple Card borrowers. The agency has ordered Goldman to pay at least $19.8 million in redress and a $45 million civil penalty, while Apple has been ordered to pay a $25 million civil penalty.
At the time of publication, AAPL shares were down 2.88% at $229.03, according to Benzinga Pro.
