Apple Reportedly Expects to Ship 90M iPhone 16s on AI Demand

US tech giant Apple Inc. reportedly estimated iPhone 16 shipments to be about 90 million in the second half of fiscal 2024, as it sees more robust demand for the new devices due to increased interest in artificial intelligence (AI) technologies.

A source with knowledge of the matter said the Cupertino-based company had informed suppliers and its partners regarding its goal to have the iPhone 16 shipments rise around 10% from the previous models after it delivered 81 million iPhone 15s in the latter half of last year.

Data from a Needham-based research firm showed that overall smartphone shipments declined by 3.2% in 2023, but the iPhone maker’s shipments were able to increase by 3.7%.

AI to Shore Up iPhone 16 Demand Amid Challenges in China

Apple’s forecasts came as it appeared to be optimistic about its move to integrate its in-house AI services into the iPhone 16.

The company expects the Apple Intelligence features to bolster demand for the new smartphone series once it launches in September, according to the sources.

The projections also signaled a possibly better year for the tech firm following a tough 2023, when China prohibited government employees from using iPhones, and the European Union (EU) subjected it to antitrust scrutiny, leaving it with a €1.84 billion ($2 billion) fine.

However, competition within the smartphone market continued to intensify, particularly as rivals such as South Korea’s Samsung Electronics Co. Ltd. and China’s Xiaomi Corp. upgraded their smartphone offerings with AI.

Apple also faced a strong contender the year earlier with Shenzhen-based Huawei Technologies Co. Ltd., as the Mate 60 Pro became a top choice for Chinese consumers due to its iconic 7-nanometer (nm) processor.

The advanced chip marked a significant milestone for China, which was initially believed only to be able to produce 14nm processors at best because of Western sanctions.

Wall Street analysts expect iPhone revenue to fall in the second half of 2024, while industry experts projected Apple’s flagship smartphone to lose ground against Huawei this year.

Furthermore, the company faces the issue of finding another AI partner for its Chinese users, considering OpenAI Inc.’s ChatGPT is banned in China. Beijing has approved over 100 AI models as of March, although all were developed by domestic firms.

The iPhone maker is reportedly seeking a Chinese AI company to collaborate ahead of the iPhone 16’s launch, but it has yet to strike a deal. Additionally, Beijing’s strict AI policies might limit the firm’s ability to integrate AI features into its product offerings in the country.

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