Apple Slashes iPhone 16 Sales Forecast by 10 Million Units
Apple has scaled down its sales forecast for the iPhone 16, with a reduction of about 10 million units for the period between the fourth quarter of 2024 and the first half of 2025, according to a report by well-known analyst Ming-Chi Kuo. This significant decrease comes amid concerns over the lack of groundbreaking features in the iPhone 16, which could impact both production and revenue for the tech giant. As Kuo explains, the absence of major artificial intelligence (AI) features and meaningful hardware upgrades is at the core of this decision, especially for the non-Pro models.
A Downward Shift in iPhone 16 Production Expectations
Originally, Apple had planned for the production of 88 million iPhone 16 units for the latter half of 2024. However, this number has now been reduced to 84 million units. The cuts reflect broader concerns about demand, with projections showing that the iPhone 16 will see a substantial decline in production compared to previous models. Specifically, estimates now place production at 80 million units for Q4 2024, 45 million units for Q1 2025, and 39 million units for Q2 2025. These figures are all lower than last year’s numbers, indicating a clear year-over-year drop in iPhone production.
While Apple’s iPhone revenue for Q4 2024 may partially absorb this decline due to a favorable product mix, the first half of 2025 is expected to be more challenging. The sales forecast reduction could signal a more difficult market environment for Apple in the coming year, particularly as consumers are becoming more discerning about the need to upgrade their devices.
Stagnation in Hardware Innovation
One of the main reasons behind Apple’s decision to cut its iPhone 16 forecast is what Kuo refers to as stagnation in hardware innovation. Although the iPhone 16 Pro and iPhone 16 Pro Max offer slightly larger displays and minor camera improvements, these changes are seen as incremental rather than revolutionary. Consumers, who are already accustomed to high-performance devices, may find it difficult to justify upgrading to a new iPhone if it only offers marginal improvements over its predecessor.
For the past four generations of Pro models, Apple has largely stuck to the same core design and technical specifications. While processor upgrades have enhanced performance, other features like the introduction of USB-C connectors and always-on displays are considered evolutionary steps rather than groundbreaking innovations. The iPhone 16, while expected to introduce new AI features such as “Visual Intelligence” and “Genmoji,” is unlikely to significantly boost consumer demand. These new AI capabilities, while exciting, may not be enough to entice users to upgrade from previous models.

AI Features and Their Impact on iPhone 16 Sales
The inclusion of AI features in the iPhone 16, such as “Visual Intelligence” and “Genmoji,” represents Apple’s attempt to stay competitive in a market that is increasingly focused on AI integration. However, Kuo suggests that these features may not be the game-changer Apple is hoping for. While AI has the potential to enhance the user experience, the iPhone 16’s AI capabilities may not yet be mature enough to drive widespread consumer adoption.
In the long term, Apple’s focus on on-device AI could prove to be a major strength, particularly as consumers begin to demand more sophisticated AI tools integrated directly into their smartphones. However, for now, the lack of hardware innovation paired with these early-stage AI features means that the iPhone 16 might not be able to stand out in a crowded market.
The Role of the iPhone SE4 in Apple’s Product Line
Another factor that could affect the iPhone 16’s sales is the upcoming release of the iPhone SE4. Expected to enter mass production in December 2024, the iPhone SE4 is anticipated to be a more affordable option for consumers. Kuo warns that the SE4 could potentially cannibalize sales of the more expensive iPhone 16 models. Given that the SE4 is likely to attract price-sensitive consumers, its success could shift Apple’s product mix, further complicating the sales outlook for the iPhone 16.
This shift in focus to lower-priced models could place additional pressure on Apple’s suppliers, particularly as the demand for premium models like the iPhone 16 Pro and Pro Max declines. As a result, the supply chain may face challenges as early as Q4 2024, with more significant impacts expected in the first half of 2025.
The Road Ahead for Apple
Despite these challenges, there is still optimism surrounding Apple’s long-term strategy, particularly when it comes to AI. Kuo notes that Apple’s emphasis on on-device AI could potentially help boost future iPhone shipments. However, this growth will likely depend on the company’s ability to pair these AI advancements with meaningful hardware innovations. For Apple to regain momentum and meet sales targets, the iPhone 16 and future models will need to offer more than just incremental updates.
In conclusion, Apple’s decision to lower its iPhone 16 sales expectations by 10 million units underscores the importance of hardware innovation in driving consumer demand. While AI features like “Visual Intelligence” and “Genmoji” add new dimensions to the iPhone 16, they may not be enough to offset the lack of revolutionary hardware upgrades. As the market becomes more saturated, Apple will need to focus on delivering compelling new features that convince users to upgrade annually. Until then, the iPhone 16 may struggle to achieve the same level of success as its predecessors.