Updated on July 19 with details on reduced orders in the iPhone 16 supply chain.
CUPERTINO, CALIFORNIA – JUNE 10: (L-R) Apple CEO Tim Cook, Apple’s senior vice president of machines … [+]
As demand for Apple’s iPhone slows, how will Tim Cook and his team attract consumers to its ecosystem? Data from analysts CIRP shows that demand for the iPhone — specifically the current iPhone 15 model — was lower than for the iPhone 14 this quarter. This reflects the pattern of lower demand seen in Q1 2024.
Update: Friday July 19: While there is talk of an AI boom when Apple releases its AI-enabled generative iPhone, that talk has yet to be reflected in the supply chain. Two major supply chain component manufacturers do not expect growth due to increased orders.
Analyst Ming-Chi Kuo reports on earnings calls from TSMC and Largan, and their forecasts for next year are similar to last year.
“My understanding is that some suppliers have seen an increase in iPhone 16 orders for 2H24, but from an EMS/assembly perspective, iPhone 16 orders for 2H24 haven’t seen much change (about 87 million units), still slightly -low from 2H23 Orders for iPhone 15 (about 91 million units).”
Since Apple is the biggest player in this market, any increased order to cover the upcoming iPhone 16 family would positively affect their forecasts. As it stands now, it’s the same story as in 2023; solid sales, but far from unlocking an untapped market thanks to AI.
Attendees check out the brand new Apple iPhone 15 during an Apple event on September 12, 2023. (Photo … [+]
The report also highlights one way Apple hopes to turn around its sales. But it’s a gamble that requires patience in the fickle smartphone market.
Apple will be looking for a key factor in the iPhone 15 family, which is already accelerating Android sales. Generative AI is transforming the idea of what a smartphone can offer users, from editing photos and videos, to summarizing and analyzing text and images, to supporting creativity.
After announcing Apple’s AI plans at the Worldwide Developers Conference in June, the company’s shares rose seven percent, largely on the promise of increased iPhone sales. Due to the high demands that generating AI places on the hardware and Apple’s desire to process as much user data as possible on the user’s device, Apple Intelligence will only work on one existing iPhone model – the iPhone 15 Pro Max.
Users without the most expensive iPhone on the market will need to purchase the latest iPhone hardware to access the A18 Pro chip, specifically designed to support generative AI routines.
Still, the AI that the iPhone obviously lacks right now won’t be available until the first quarter of 2025. Tim Cook and his team will be asking the Apple faithful to buy the smartphone with the promise of getting the AI at some point in the future.
Meanwhile, all of these benefits are available on Android and have been since Google introduced the idea of the first AI smartphone in October 2024 during the launch of the Pixel 8. With Google’s Pixel 9 family due to be announced in August, Apple’s iPhone will be two generations behind Android’s AI efforts before it even leaves the Cupertino stage.
Will consumers be happy to wait for Apple to catch up with the competition, or will they decide that the AI revolution can’t wait? If it’s the former, then Apple’s decision to “move on” should help revive iPhone sales. But if it’s the latter, the Android ecosystem may have just found Tim Cook’s Achilles heel.
Now read more about Apple’s plans to launch iPhone 16 and iPhone 16 Pro…
