William Gallagher
In a sketchy new report, analyst Ming-Chi Kuo concludes that Apple Intelligence is a failure because Apple may have cut iPhone 16 orders before release. Or something like that.
Reporting Apple's iPhone orders is a dodgy business at the best of times — even Ming-Chi Kuo has said some claims are weird. Apple switches suppliers, for one thing, and with a finite production capacity — incredibly large, but still finite — it also changes the mix of devices being made to match demand.
That last is perhaps what Kuo is reporting now. Writing on his blog, he says that "iPhone 16 orders were cut by around 10M units for 4Q24— 1H25, with most of the cuts affecting non-Pro models."
Kuo says his figures are based on his own supply chain survey. He's now saying the industry will make 84 million iPhones in the second half of 2024, down from 88 million.
The rest of that overall 10 million drop is from 4Q24 dropping from 84 million to 80, 1Q25 down from 48 million to 45 million. And for 2Q24 dropping from 41 million to 39 million.
It all probably works out to a 10 million drop, anyway. Something like that.
Apple Intelligence has not boosted sales
What's more significant, says Kuo, is that this means Apple Intelligence is not going to be the big boost that Apple expected. At least, not at first.
"Apple's recent order cuts suggest this optimistic expectation may not materialize in the short term," writes Kuo. "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," he concludes.
It's true that iPhone 16 sales have been lackluster - in the US, at least, as they're high in China. It's also reportedly true that the iPhone 16 Pro models have fared better than the regular iPhones.
They would, though. They always do.
iPhone SE 4 will boost sales and dent revenue
Having painted a picture of the iPhone being under stress because of the yet-to-launch Apple Intelligence failing to improve sales, Kuo then goes the opposite way and says Apple will be fine.
"Apple's iPhone revenue in 4Q24 may not fully reflect the impact of production cuts," he writes, "as the gap between production and sell-through in 4Q23 was larger than in 4Q24, and the product mix in 4Q24 is more favorable (with increased production of the Pro Max model for Sep-Oct)."
That favorable product mix won't last, though, as Kuo sees Apple's revenues taking a hit because of the success he predicts for the expected iPhone SE 4 in early 2025.
The iPhone SE 4 is expected to support Apple Intelligence.
In recent years Ming-Chi Kuo's reports have varied between supply chain information, and extrapolation of Apple's plans. For once he has clearly said that his latest report is based on an industry survey, but at the same time he has a poorer track record for predicting Apple's plans.
Regardless, the tale will be partially told on October 31, when Cook and company announce earnings.
Wesley Hilliard
Andrew O'Hara
Amber Neely
Malcolm Owen
6 Comments
I’m about as confused as everyone else must be. Kuo is absolutely all over the place lol
Bottom line his doomed track record is pretty consisten; doomed to innacuracyt: he’s got to have cost his clients a fortune unless they simply use him contrarian.
At this point does anyone NOT believe that these 'analysts' are simply working to manipulate the market? Sell, buy, sell, buy. Liquidity for funds that needs monthly income. It's a near completely corrupt system. It's manipulation and if they ever cracked down on these grifters the market would be 'less liquid' which means financial institutions wouldn't manufacture profit for themselves as easily.
Just simply go Long and avoid any manipulation. Don’t step into the ring with these guys and start trading. That’s exactly what they want. Don’t give in to the trading temptation.
He's probably got only half the story.
So, as AI points out, Apple changes the mix. Likely, based on other reports of strong Pro demand, Apple has cut non-Pro orders and boosted Pro orders, but Kuo only got the data on the cuts, not the increases. Another possibility is that Apple intentionally shifts orders around to flush out who's leaking data to whom.