Hold your horses on that AI-fueled Apple upgrade cycle, folks.
Renowned industry analyst Ming-Chi Kuo has issued a cautionary note, suggesting that the rosy projections for iPhone sales in 2025 might be a tad premature.
Kuo, known for his deep dives into Apple’s supply chain, paints a less rosy picture, arguing that the anticipated boost from new AI features might not materialize as quickly as some hope.
According to Kuo’s latest research, Apple itself seems to be adopting a more cautious stance. The company is reportedly signaling to its suppliers that iPhone production in 2025 could fall a significant 8-10% below current market consensus.
Even the expected mid-2025 launch of the new iPhone SE4 isn’t anticipated to dramatically shift the needle, with overall iPhone shipments in the first half of the year projected to decline by around 6% year-over-year.
This less-than-stellar outlook is further compounded by Apple’s ongoing struggles in the critical Chinese market. While the overall smartphone market in China remained relatively flat in December 2024 compared to the previous year, iPhone shipments reportedly took a 10-12% dip.
Adding to the potential headwinds are design choices for upcoming iPhones. Kuo highlights that the rumored ultra-thin iPhone 17 and the planned foldable iPhone, both potentially featuring eSIM-only designs, could face adoption challenges in China, where physical SIM cards remain the norm.
Furthermore, Kuo casts doubt on the immediate impact of “Apple Intelligence” – the company’s recently unveiled suite of on-device AI features.
Despite the initial buzz, Kuo believes there’s no concrete evidence suggesting these features will drive significant hardware upgrades or boost service revenue in the near term.
Kuo points to Tim Cook’s recent comments indicating no internal discussions about charging for Apple Intelligence, aligning with his survey data suggesting limited user interest in the new AI capabilities.
While not bearish on Apple’s long-term AI prospects, Kuo urges caution against potential downside risks fueled by earlier market exuberance.
He estimates iPhone shipments for both 2024 and 2025 to hover around the 220-225 million mark, significantly below the market consensus of 240 million or higher.
Apple Intelligence was revealed at WWDC in June 2024 for the Pro and Pro Max segments of the iPhone 15 as part of iOS 18 launch to much fanfare but continues to gripe with challenges.
Earlier last week, 9to5Mac noted how Apple Intelligence now takes a whopping 7 GB of space on each of the devices you install it on, compared to the 4 GB needed at the time of the launch.
Meanwhile, adoption remains low — with few users finding the effort and drained-battery worth their time in actually using the technology.
This is at a stark contrast with the ever-widening adoption of other consumer-facing AI tools such as OpenAI’s chatGPT and xAI’s Grok.
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