Apple is betting big on artificial intelligence (AI) to boost sales of the upcoming iPhone 16. The tech giant expects to ship at least 90 million units of the new model, fueled by the AI capabilities unveiled with Apple Intelligence in June. This represents a 10% increase in sales, according to sources familiar with Apple’s plans.
The optimism around AI comes at a crucial time for Apple. The company has seen a decline in its biggest revenue stream—iPhone sales. In the last full financial year, iPhone sales dropped to $200 billion from $205 billion the previous year.
The trend continued into the first six months of the current financial year, with sales slipping to just under $116 billion. The downward trend has been particularly noticeable in key markets like China, according to research firm Counterpoint. With changing consumer behavior, as users delay upgrading to new devices, Apple needs its AI features to be compelling enough to prompt purchases.
Competitors like Google and Samsung are also heavily investing in their AI capabilities.
Apple’s AI-powered iPhone sales boost
Google is incorporating its AI model Gemini into Pixel devices, and Samsung has launched Galaxy AI with its S24 series and made it compatible with older devices, such as the S23 and Z Fold 5.
Apple’s strategy differs slightly, as it is reserving its new AI features for the latest models like the upcoming iPhone 16 and the existing iPhone 15 Pro. This could drive upgrades among users who want the newest technology. However, the key question is whether consumers will find these AI features valuable enough to warrant a new purchase.
Supply chain insiders have reported that Apple is aiming to build on the 81 million units shipped in the second half of 2023, anticipating a robust uptick spurred by the positive reception of Apple Intelligence. This sentiment is supported by a recent increase in chip orders from TSMC, hinting at potential sales of between 90 to 100 million units for the iPhone 16, compared to the iPhone 15’s order volume of 80 to 90 million units. Analysts are predicting a “Supercycle” upgrade for the iPhone 16, driven by the new AI capabilities and improved services that AI firms can offer consumers.
The demand for these features, coupled with a recovering smartphone market in China, augments Apple’s optimistic outlook. In May 2024, Apple reported a 44% increase in sales from April and a 40% year-on-year growth in revenue from the Chinese market, highlighting a substantial turnaround from previous projections. As the new iPhone models hit the market, Apple won’t have long to wait to see if its AI bet pays off.
The company’s bold expectations for a 10% increase in shipments for the iPhone 16 reflect a renewed confidence based on emerging AI technologies and a recovering key market, setting a promising stage for Apple’s performance in 2024.
Johannah Lopez is a versatile professional who seamlessly navigates two worlds. By day, she excels as a SaaS freelance writer, crafting informative and persuasive content for tech companies. By night, she showcases her vibrant personality and customer service skills as a part-time bartender. Johannah's ability to blend her writing expertise with her social finesse makes her a well-rounded and engaging storyteller in any setting.
