Barclays Warns of Weak iPhone 16 Demand, Shares Fall 3%

Apple Inc. (NASDAQ:AAPL) may have reduced its iPhone 16 production orders by around 3 million units for the December quarter, according to Barclays analysts, pointing to potentially "weak demand" for the latest model. Following this report, Apple shares dropped over 3% intra-day today.

If confirmed, this would represent one of the earliest production cuts in recent years for the tech giant. Barclays analysts observed a 15% year-over-year decline in global iPhone 16 sales during the first week of availability, based on their sell-through checks. Additionally, the analysts tracked shorter wait times across key global markets, signaling softer demand for the iPhone 16 compared to its predecessor.

The reduced wait times, especially in the U.S. and China, suggest demand is not meeting expectations, despite last year's supply chain issues that extended lead times for the iPhone 15 Pro models. The analysts believe these data points underscore weaker-than-anticipated consumer interest.

Barclays continues to maintain an Underweight rating on Apple, citing several challenges, including softer consumer spending, macroeconomic headwinds, and rising competition. The delayed rollout of Apple Intelligence, particularly for the Chinese language, which is not expected until 2025, could further temper demand in China, a key market for Apple. Europe is also expected to experience a staggered launch of these AI features through 2025, limiting the device's appeal in the region.

For the September quarter, Barclays projects iPhone sales to hit 51 million units, aligning with both consensus and their own estimates. This forecast accounts for additional sales days due to the earlier release of the iPhone 16, though analysts note that this factor is already well-known within the market.

Looking ahead, Barclays cautions that the December quarter could face increased risk if sales continue to underperform, particularly due to the staggered rollout of Apple Intelligence, slow AI adoption outside the U.S., and limited hardware differentiation in the iPhone 16.