Apple’s Production Cuts Indicate Weak Demand

Investing.com — Apple Inc (NASDAQ:AAPL) may have reduced its iPhone 16 production orders by approximately 3 million units at a key semiconductor component supplier for the December quarter, according to Barclays analysts on Tuesday, suggesting “weak demand” for the newest model.

Apple shares fell more than 1% in premarket trading.

If confirmed, this would mark “the earliest build cut in recent history,” analysts noted.

Our sell-through checks point to a 15% decline year-over-year for global iPhone 16 sales in the first week, they continued. We also tracked iPhone availability across geographies globally, indicating softer demand for IP16 compared to last year.

Moreover, wait times across major geographies were significantly shorter than the previous year.

While supply chain constraints on IP15 Pro models extended lead times last year, they point to potentially weaker-than-expected demand, especially in the US and China. All of the above data suggest softer demand than previously anticipated, analysts remarked.

Barclays maintains an Underweight (UW) rating on Apple’s stock, citing several negative factors including weaker consumer spending, macroeconomic pressures, and increased competition.

Furthermore, the delayed rollout of Apple Intelligence, particularly in the Chinese language not expected until 2025, may dampen enthusiasm for the iPhone 16 in China—a key market for Apple. Europe is also expected to experience a staggered launch of the new AI features through 2025, potentially limiting the new device’s appeal.

Barclays projects iPhone unit sales for the September quarter to reach 51 million, matching both consensus and Barclays’ own estimates. This projection assumes some channel fill, potentially benefiting from more selling days compared to last year.

The earlier launch of the iPhone 16 adds two days of sales to the September quarter, but analysts say that this factor is already widely recognized.

Nevertheless, the December quarter appears to be “increasingly at risk” with the recent order cuts if sell-throughs continue to be underwhelming, Barclays notes, due to “staggered rollout of Apple Intelligence, limited adoption of AI outside of the US, and lack of hardware differentiation.”

The investment bank will continue to monitor iPhone 16 sell-through data, lead time dynamics, and customer feedback on Apple Intelligence following its rollout in October.