iPhone 16 series may face the fastest production cut in recent years, Barclays maintains Apple's "underweight" rating

Zhitong
2024.10.01 13:51
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Barclays maintains its "underweight" rating on Apple with a target price of $186, citing weak demand for the iPhone 16 series and an expected reduction of 3 million units in production. This is the fastest production cut in recent years, indicating insufficient market demand. While demand for the high-end Pro and Pro Max models remains stable, overall sales face risks, especially in the case of poor sales performance. Barclays analysts estimate that iPhone 16 sales may reach 51 million units, but further sales performance needs to be monitored

According to the information obtained from the Smart Finance app, Barclays stated that due to weak demand for the iPhone 16 series, it maintains a "underweight" rating for Apple (AAPL.US) with a target price of $186.

Based on Barclays' supply chain channel checks, Apple may have reduced the production of iPhone 16 by 3 million units by the end of December quarter.

Barclays analysts Tim Long and George Wang stated in a report on Tuesday: "Based on our recent supply chain channel checks, we believe Apple may have cut production of key iPhone semiconductor components by about 3 million units for the fourth quarter, if confirmed, this would be the earliest production cut in recent years."

Barclays previously discussed the global iPhone 16 delivery time being shortened, both of which indicate weak demand for the iPhone 16.

The Apple Smart feature is set to launch in the U.S. in mid-October with the update of iOS 18.1. However, the launch of the Chinese version will not begin until 2025. Barclays stated that the entry of Apple Smart into the European market also seems to be delayed until 2025.

Long stated: "We expect initial iPhone sales to reach 51 million units, which is the best case scenario, assuming some channels' sales remain flat or better than last year due to increased sales days."

He added: "However, if sales continue to disappoint, due to the staggered launch of Apple Smart, limited adoption of artificial intelligence outside the U.S., and lack of hardware differentiation, recent orders have decreased, and fourth-quarter sales seem to face increasing risks."

Despite indications that demand for the iPhone 16 has weakened compared to previous models at this time in the cycle, other analysts point out that demand for the high-end Pro and Pro Max models remains stable.

Several analysts also predict that demand for the iPhone 16 will increase after the release of the updated version in mid-month, with specific details remaining to be observed

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