Apple shares took a 2% hit on Wednesday after well-known industry analyst Ming-Chi Kuo revealed that the company has reduced iPhone 16 production by around 10 million units for the last quarter of 2024 and the first half of 2025. While the iPhone 16 Pro models, known for their advanced displays and cameras, have remained popular, it’s the standard iPhone 16 that’s seeing the bulk of the cuts.
Kuo now estimates that Apple will produce 84 million iPhone units in the second half of 2024, a drop from his earlier prediction of 88 million. For the fourth quarter alone, Apple’s partners are expected to manufacture around 80 million iPhones, down from 84 million units last year. Looking ahead to the first half of 2025, production forecasts have also been slashed, with Kuo predicting 45 million units for the first quarter and 39 million for the second, both lower than last year’s numbers.
The decline in production has raised concerns about Apple’s iPhone revenue in early 2025, particularly with the anticipated launch of the iPhone SE 4, which Kuo believes will impact the overall product mix. Apple's SE models are generally the most affordable in the lineup but are refreshed less frequently than their premium counterparts.
Despite the short-term challenges, Kuo remains optimistic about Apple’s future, especially as the company dives deeper into artificial intelligence. He highlighted Apple Intelligence, an on-device AI service set to debut as a beta in the upcoming iOS 18.1 update. This new feature will initially offer capabilities like summarizing texts and emails, along with automatic text message replies. Supported by the latest iPhone 16 and 15 models, this AI development could be key to driving future growth—though Kuo suggests that hardware innovation will need to accompany these AI advancements to spark a significant boost in iPhone shipments.
While Apple has not commented on the recent production cuts, all eyes will be on how the company navigates the balance between innovation and market demand in the months ahead. The question remains: will AI and hardware breakthroughs be enough to reignite iPhone sales and restore investor confidence?
