Apple shares drop 3% as shorter iPhone 16 shipping times signal softer demand

Apple iPhone 16 Pro demand: Apple Inc. shares fell nearly 3 per cent on Monday following concerns from analysts that shorter shipping times for the newly launched iPhone 16 Pro models may indicate weaker-than-expected demand. The decline is partly attributed to the delayed release of key artificial intelligence (AI) features in the latest iPhone series.

Last week, Apple introduced its highly anticipated iPhone 16 series, highlighting its new AI software, Apple Intelligence. However, early pre-order data from BofA Global Research showed that the shipping times for the iPhone 16 Pro models are shorter compared to last year's iPhone 15 Pro models. This raised concerns about the level of consumer interest in the new phones.

According to the data, the average shipping time for the iPhone 16 Pro is currently 14 days, significantly shorter than the 24-day wait for the iPhone 15 Pro last year. Similarly, the iPhone 16 Pro Max has a shipping time of 19 days, compared to 32 days for the Pro Max model in 2022.

Ming-Chi Kuo, an analyst at TF International Securities, noted that the lower-than-expected demand for the iPhone 16 Pro series could be due to the fact that Apple Intelligence, a major selling point of the new phones, is not available at launch. The AI feature is expected to roll out in the US next month in beta for the English language, with other versions being delayed until next year, potentially discouraging some customers from upgrading right away.

Kuo also reported a decline in first-weekend pre-order sales for the iPhone 16 Pro and Pro Max models, which were down 27 per cent and 16 per cent, respectively.

Jefferies analysts echoed the sentiment, stating, "The US market is showing weaker demand compared to last year unless Apple significantly increased supply allocation."

However, some analysts suggested that improved supply chain management could be contributing to the shorter shipping times. Last year, supply issues with a camera lens affected the availability of the iPhone 15 Pro Max, which may not be the case this year.

D.A. Davidson analyst Gil Luria commented, "We are not concerned if pre-orders don't show meaningful growth. The AI features will be rolled out gradually, meaning the upgrade cycle is likely to materialise over the next 12 to 18 months."

As Apple continues its AI rollout, investors will be watching closely to see how the new features impact the long-term demand for the iPhone 16 series.

(With Reuters inputs.)