Apple cuts iPhone 16 production by millions of units: demand for devices falls

Sales of the iPhone 16 have fallen below Apple’s expectations, and the company is being forced to cut production. According to renowned analyst Ming-Chi Kuo, production of the devices will be reduced by nearly 10 million units from late 2024 to mid-2025.

According to well-known analyst Ming-Chi Kuo, production of the devices will be reduced by nearly 10 million units from late 2024 to mid-2025.

Phone 16 production cuts

The production cuts mainly affect the standard and Plus models, indicating steady demand for the iPhone 16 Pro only. Apple will now produce 84 million smartphones by the end of the second half of 2024, instead of the planned 88 million.

Apple will now produce 84 million smartphones by the end of the second half of 2024, instead of the planned 88 million.

The distribution by quarter is as follows:

• Fourth quarter 2024: 80 million devices (vs. 84 million in the fourth quarter of 2023)
• First quarter 2025: 45 million devices (instead of 48 million in the first quarter of 2024)
• Second quarter 2025: 39 million devices (versus 41 million in the second quarter of 2024)

How this will affect financial results

Apple does not expect a significant loss in the fourth quarter of 2024, despite the production cuts. The main reason for this is that the company produced and sold fewer devices than planned last year. It’s also worth noting that the iPhone 16 Pro Max, the most expensive in the lineup, will be the main driver of sales.

Apple expects the iPhone 16 Pro Max to be the main driver of sales.

The impact of lower production will become more pronounced in the first half of 2025, however. That’s due to the release of the cheaper iPhone SE 4, which could lower the average price of units sold.

Artificial intelligence didn’t help

It was previously thought that the launch of Apple’s new Apple Intelligence (AI) technology could boost demand for iPhones, but now it’s clear that the company is no longer counting on artificial intelligence to fix things.

This information is supported by an earlier report from Barclays, which also reported a three million unit decline in production in December and a 15% drop in sales compared to last year. According to experts, one of the reasons for weak demand is a lack of hardware innovation.

A lack of hardware innovation is one of the reasons for the weak demand.

Can Apple overtake Samsung?”

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At the end of 2024, the question remains: can Apple, as analysts predicted, become the smartphone market leader, overtaking Samsung? Against the backdrop of recent events, that seems unlikely, but only sales results will tell.