Apple's new iPhone demand flashing red light: Morgan Stanley says iPhone 16 delivery time is decreasing

A demand indicator for the new generation iPhone from Apple that Wall Street is closely watching seems to be flashing a red light. A recent report from Morgan Stanley pointed out that the delivery time for iPhone 16 is lower than the first three iPhone new model cycles.

The report stated that as of this Tuesday, September 24th, within the first 11 days after Apple started taking orders, the delivery time for iPhone 16 in the United States was 15.2 days, while the average delivery time for the same period last year for the iPhone 15 series was 25.7 days, and for the iPhone 14 series it was 18 days. In international markets outside the United States, the delivery time for iPhones also showed a similar downward trend, with the average delivery time for iPhone 16 being 16.3 days, lower than the 28.5 days for iPhone 15.

The report also mentioned that within the iPhone 16 series, the delivery time for the Pro and Pro Max models is significantly shorter compared to previous cycles. As of Tuesday, in the United States, the delivery time for iPhone 16 Pro Max was 25.5 days, 18 days shorter than the previous iPhone 15 Pro Max. The delivery time for iPhone 16 Pro was 18.5 days, lower than the estimated 21.5 days from last Friday.

Morgan Stanley analysts led by Erik Woodring commented on the delivery time data in the report:

"Although the supply has improved and we have heard positive rumors about the demand for iPhone 16, we remain cautious in interpreting these data points."

While the delivery time has shortened, Morgan Stanley also pointed out that these early data points are not strong enough in predicting the entire sales cycle.

"Overall, the negative impact of these data points on the iPhone 16 cycle outweighs the positive impact, although their predictive power for the entire cycle is still limited."

The report stated that the delivery time trajectory of iPhone 16 is very similar to past cycles, with the delivery time of iPhone 16 peaking seven days after ordering began, similar to more than six previous iPhone cycles.

After the report was released, Apple's stock price rebounded on Tuesday but fell on Wednesday, dropping by about 1.2% at the opening, narrowing the decline in the morning, almost erasing the losses, and then expanding to over 1% by midday.

Before the release of the aforementioned Morgan Stanley report, some Wall Street institutions had already issued warnings about the demand issues reflected in the initial order data for iPhone 16.

A Wall Street article from last Monday mentioned that Ming-Chi Kuo, the "prophet" of Apple and an analyst at TF International Securities, estimated that the pre-order sales volume of the iPhone 16 series during the first weekend was about 37 million units, a decrease of approximately 12.7% compared to the same period last year for the iPhone 15 series, with the key issue being the lower-than-expected performance of the iPhone 16 Pro series Guo Mingchi stated that one of the key factors leading to the decline in demand for the iPhone 16 series is that the main selling point, Apple Intelligence, was not released together with the iPhone 16. In addition, the intense competition in the Chinese market continues to impact the demand for iPhones.

Barclays analysts also mentioned the impact of Apple Intelligence, stating that the Chinese version of Apple Intelligence will not be launched until 2025, which may weaken people's early enthusiasm for the iPhone 16.

Barclays estimated that the total pre-orders in the days leading up to the launch of the iPhone 16 decreased compared to the previous year, with a lower proportion of Pro models. The sales of Pro models decreased by double digits year-on-year, while the sales of the base and Plus models recorded growth year-on-year.

Analysts from Bank of America stated that the delivery time for the iPhone 16 Pro and Pro Max models has been slightly extended, but on average, it has decreased compared to the same stage of the pre-order period last year. Bank of America also pointed out that the extension of the delivery date can reflect the demand for the iPhone, but other factors such as supply, inventory, distribution, and pricing may also affect the delivery date.

A recent report from Citigroup stated that as of last Friday, September 20th, the average delivery time for the base model of the iPhone 16 worldwide, including the United States, has been extended by one week compared to tracking data from a week ago. In the United States, the United Kingdom, and India, the delivery time for the iPhone 16 Pro model has increased by 3 to 7 days, while in China, it has decreased by about 12 days. The delivery time for the Pro Max model remains unchanged in the United States and the United Kingdom, has increased in India, and has decreased in China.

Citigroup's report mentioned that compared to the iPhone 15, the delivery time for the base model of the iPhone 16 is roughly the same except in the Chinese market, while the delivery time for the Pro model has been shortened. However, Citigroup noted that the overall supply chain situation for the entire iPhone 16 series has improved this year, and believes that the Apple Intelligence feature may affect the sales cycle and seasonality of the iPhone 16 series