Apple Stock Declines as Barclays Reports Weak Demand for iPhone 16

Apple Inc. may have reduced its iPhone 16 production orders by approximately 3 million units at a key semiconductor supplier for the December quarter, according to Barclays analysts, indicating potential “weak demand” for the latest model.

As a result, Apple shares fell by over 1% in premarket trading.

If this reduction is confirmed, it would represent the earliest production cut in recent history. Analysts reported a 15% year-over-year decline in global iPhone 16 sales during the first week of availability. Their observations of iPhone availability across various regions also suggest softer demand for the iPhone 16 compared to the previous year.

Additionally, the wait times in major markets are considerably shorter than last year. While supply chain constraints on the iPhone 15 Pro models resulted in extended lead times last year, the current situation points to potentially weaker-than-expected demand, particularly in the US and China. These insights collectively indicate a demand trend that is softer than previously anticipated.

Barclays maintains an Underweight (UW) rating on Apple’s stock, citing various negative factors such as declining consumer spending, macroeconomic challenges, and heightened competition.

The delayed launch of Apple Intelligence, especially the Chinese language version not expected until 2025, could dampen interest in the iPhone 16 in China, a vital market for Apple. Europe is also set to experience a staggered rollout of the new AI features through 2025, which may limit the appeal of the new device.

Barclays projects iPhone unit sales for the September quarter to reach 51 million, aligning with both consensus and its own estimates. This projection takes into account some channel filling, which may benefit from a greater number of selling days compared to the previous year.

The earlier release of the iPhone 16 adds two additional sales days to the September quarter, though analysts believe this factor is already well known.

However, the December quarter is increasingly viewed as “at risk” due to the recent order reductions, especially if sales continue to be disappointing. Contributing factors include the staggered rollout of Apple Intelligence, limited adoption of AI outside the US, and a lack of hardware differentiation.

The investment bank plans to closely monitor iPhone 16 sales data, lead time trends, and consumer feedback on Apple Intelligence after its rollout in October.