Barclays analyst Tim Long has cast a shadow of doubt over Apple’s iPhone 16 launch, citing potential build cuts and weak initial sales figures. Long’s analysis suggests that Apple may have already reduced iPhone component orders for the December quarter, indicating a softer demand than anticipated. This early move to cut orders, if confirmed, would mark the earliest adjustment in recent history, usually happening in early to mid-October based on sales data.
Long’s supply chain checks reveal a potential cut of roughly 3 million units of a key semiconductor component for iPhones. This comes after news of increased iPhone production in early July, just weeks after the introduction of Apple Intelligence. Despite the early build-up, Long’s research indicates that global iPhone 16 sales fell by 15% year-on-year in the first week of sales. He also notes shorter wait times for the new iPhones compared to last year’s iPhone 15, suggesting weaker demand, particularly in the US and China.
The analyst attributes this potential weakness to a combination of factors, including waning consumer spending, macro-economic pressures, and increasing competition. Furthermore, the limited availability of Apple Intelligence in key markets like China and Europe, where it’s not slated to be fully launched until 2025, could further dampen enthusiasm for the iPhone 16. Long believes that the staggered rollout of AI features in these markets may limit the excitement surrounding the new device.
Although the September quarter iPhone units are on track for 51 million, assuming some channels meet or exceed last year’s performance due to more selling days, the December quarter appears increasingly at risk. This is largely due to the continued weak sell-throughs, the staggered rollout of Apple Intelligence, and the need for significant hardware differentiation to stand out in the market.
In light of these concerns, Long maintains an Underweight rating on Apple Inc. with a price target of $186. AAPL stock is down 3.19% at $225.57 at publication Friday. While the launch of the iPhone 16 is still relatively fresh, Long’s analysis highlights the potential headwinds Apple may face in the coming months. Only time will tell whether the company can navigate these challenges and achieve its sales targets.
