Apple Forced Into Risky AI Gamble With iPhone 16 Pro

Up to date July 19 with particulars on lowered orders within the iPhone 16 provide chain.

With demand for Apple’s iPhone slowing down, how will Tim Cook dinner and his staff lure shoppers to its ecosystem? Data from analysts CIRP present that demand for the iPhone —particularly the present iPhone 15 mannequin—is decrease than that of the iPhone 14 on this quarter. This echoes the sample of decrease demand seen in Q1 2024.

Replace: Friday July 19: Whereas there may be discuss of a synthetic intelligence growth when Apple launches its generative AI-capable iPhones, that discuss will not be but mirrored within the provide chain. Two main element producers within the provide chain are usually not anticipating progress because of elevated orders.

Analyst Ming-Chi Kuo reports on earnings calls from TSMC and Largan, and their forecasts for the approaching yr are much like final yr.

“My understanding is that some suppliers have seen a rise in iPhone 16 orders for 2H24, however from the EMS/meeting perspective, the iPhone 16 orders for 2H24 haven’t seen a lot change (about 87 million models), nonetheless barely decrease than the 2H23 iPhone 15 orders (about 91 million models).”

With Apple the most important participant on this market, any elevated order to cowl the upcoming iPhone 16 household would positively influence their projections. Because it stands, it’s the identical story as 2023; strong gross sales however nowhere near unlocking an untapped market because of AI.

The report additionally highlights a method Apple is hoping to show round gross sales. Nevertheless it’s of venture that asks for persistence from the fickle smartphone market.

Apple shall be trying in direction of one key issue within the iPhone 15 household, which is already accelerating Android gross sales. Generative AI has remodeled the view of what a smartphone can provide shoppers, from modifying photographs and movies, by means of summarising and evaluation of textual content and pictures, to helping creativity.

Following the announcement of Apple’s AI plans at June’s Worldwide Developer Convention, shares in the company rose seven percent, totally on the promise of elevated iPhone gross sales. Due to the excessive calls for generative AI locations on {hardware} and Apple’s push to course of as a lot consumer information on the consumer’s gadget as attainable, Apple Intelligence will solely run on one current iPhone mannequin—the iPhone 15 Pro Max.

Shoppers with out the most costly iPhone in the marketplace might want to purchase the newest iPhone {hardware} to entry the A18 Pro chip particularly designed to assist generative AI routines.

But the AI that the iPhone is clearly missing proper now won’t be accessible till the primary quarter of 2025. Tim Cook dinner and his staff shall be asking the Apple trustworthy to purchase the smartphone on the promise of receiving the AI sooner or later sooner or later.

In the meantime, all of these advantages can be found on Android and have been since Google launched the concept of an AI-first smartphone in October 2024 throughout the Pixel 8 launch. With Google’s Pixel 9 household because of be introduced in August, Apple’s iPhone shall be two generations behind Android’s AI efforts earlier than it has even left the Cupertino stage.

Will shoppers be blissful to attend for Apple to catch as much as the competitors, or will they resolve that the AI revolution can’t wait? If it’s the previous, then Apple’s resolution to “go lengthy” ought to assist revitalise gross sales of the iPhone. But when it’s the latter, the Android ecosystem might have simply discovered Tim Cook dinner’s Achilles heel.

Now read more about Apple’s iPhone 16 and iPhone 16 Pro launch plans…