iPhone 16 production cut by millions as AI no longer expected to revive demand

The iPhone 16 series is not selling as well as Apple had hoped, with another analyst saying that production has been scaled back.

Typically reliable insider Ming-Chi Kuo has revealed that Apple has cut iPhone 16 orders by nearly 10 million units for the period spanning the last quarter of 2024 to the first half of 2025.

The cuts mostly impact the standard and the Plus models, which suggests demand for the Pro models is in line with expectations.

After the cuts, Apple will have produced 84 million units by the end of the second half of 2024, as opposed to the originally planned 88 million units. Here's a quarter-wise breakdown:

• Fourth quarter of 2024: 80 million units (vs 84 million in Q4 2023)
• First quarter of 2025: 45 million units (vs 48 million units in Q1 2024)
• Second quarter of 2025: 39 million units (vs 41 million units in Q2 2024)

Apple's revenue is not forecasted to take a hit in Q4 as there was a bigger gap in the number of iPhones produced and sold in Q4 2023 compared to this year. It also helps that the iPhone 16 Pro Max, the most expensive model in the lineup, is expected to be the top seller during the quarter.

The impact of the cuts will be felt more acutely in H1 2025, partially due to a lower average price as a result of the iPhone SE 4's release.

Previously, it was believed that the rollout of Apple Intelligence would boost sales but it looks like the company is no longer counting on AI to turn the situation around.

Today's report echoes a report from Barclays a few weeks ago, which said that Apple had cut iPhone 16 production by three million units for the December quarter. That report also said sales of iPhone 16 were down 15 percent year-over-year.

Both reports hinted that a lack of emphasis on hardware innovation is among the reasons why the demand is tepid for Apple's latest handsets.

Does this mean Apple will not be able to overtake Samsung as the number one seller during the fourth quarter of the year as previously predicted? Only time will tell.