Apple faces challenges with its iPhone 16 and 16 Plus models, as weak demand has led the company to cut production by up to 10 million units through the first half of 2025. According to well-known Apple analyst Ming-Chi Kuo, this drop mainly impacts the standard iPhone 16, while the Pro models—offering advanced displays and cameras—remain more popular with consumers.
Apple initially projected 84 million units for iPhone 16 production in Q4 2024 but has now lowered this to 80 million. Production forecasts for early 2025 show further reductions, with 45 million units expected in Q1 and only 39 million units in Q2. For comparison, the iPhone 15 series had an original estimate of 90–91 million units, highlighting the ongoing shift in demand.
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AI Limitations and Market Access Issues
Kuo also commented on the challenges Apple faces in integrating Apple Intelligence, an AI-powered feature, into its devices. Due to regulatory barriers, Apple cannot fully launch this AI functionality in China and parts of Europe, limiting the feature’s potential reach in two key smartphone markets. Apple Intelligence incorporates elements of ChatGPT, which is restricted in China, adding complexity to Apple’s AI rollout.
“I believe Apple has the best chance of success in on-device AI among all companies,” Kuo stated, “and the potential for Apple Intelligence as a popular paid service is high. However, significant growth in iPhone shipments will require more hardware innovation alongside AI development.”
On a positive note, Apple’s iPhone SE4 is set to begin production in December 2024, with an expected output of around 8.6 million units by Q1 2025. This budget-friendly model could attract a different segment of consumers, offering Apple an opportunity to reach more price-sensitive markets.
As Apple adapts to fluctuating demand, future iPhone success may hinge on balancing AI features and innovation with strategic hardware upgrades.
