Ahead of the highly anticipated launch of its artificial intelligence-equipped iPhones, Apple Inc. AAPL has reportedly increased its orders for new iPhones, signaling strong confidence in its upcoming products.
What Happened: Apple has instructed suppliers to prepare components for approximately 88 million to 90 million new iPhones, reported Nikkei Asia on Thursday, citing multiple sources familiar with the plan.
The tech giant is gearing up for the launch of its first AI-equipped iPhones on Sept. 9. This year’s orders surpass last year’s initial component orders of around 80 million units of the iPhone 15 series.
Some suppliers reported receiving orders for over 90 million units. However, they noted that Apple typically places higher initial orders and adjusts them post-launch.
Despite the strong orders, Apple faces stiff competition in China, which accounted for 17% of its revenue in the first quarter. Huawei Technologies has recently overtaken Apple in the Chinese market.
Additionally, Apple is navigating geopolitical tensions between the U.S. and China, with the Chinese Ministry of Foreign Affairs raising safety concerns about iPhones.
Jeff Pu, managing director of Haitong Securities, forecasts about 88 million new iPhone shipments this year but does not expect a “supercycle.” He believes 2025 could be more significant as the AI ecosystem matures.
Apple did not immediately respond to Benzinga's request for comment.
See Also: Apple September 9 ‘Glowtime’ Event: Here’s Everything Cupertino Is Expected To Launch
Why It Matters: The increased orders for the new AI-enabled iPhones come amid a series of strategic moves by Apple. On Tuesday, analyst Daniel Ives of Wedbush highlighted that the upcoming iPhone launch could trigger Apple’s biggest upgrade cycle in history.
Ives emphasized that the AI technology integrated into these new models could drive a significant growth phase for Apple.
"This starts a historical period… 25% of the world based on our estimates will ultimately access AI through an iPhone," he said in an interview.
Moreover, IDC’s market update suggested that global smartphone shipments are expected to rise by 5.8% in 2024. This recovery is anticipated to benefit Apple, especially with the introduction of generative AI capabilities in its new models.
However, the company is also facing challenges. On Wednesday, reports surfaced that Apple laid off about 100 employees from its services division, indicating internal restructuring efforts.
Additionally, renowned analyst Ming-Chi Kuo noted that the iPhone 17 Pro Max, set for a 2025 release, will feature enhanced AI capabilities, which could be a major selling point.
Price Action: Apple’s shares were up 0.94% in premarket trading on Thursday, after closing at $226.49 on Wednesday. Apple’s stock is up 22% year-to-date, according to Benzinga Pro data.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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