Apple announced the release of its AI package, Apple Intelligence, in late October 2024. However, it will not be available in Germany until April 2025. Despite the anticipation, these AI features have not significantly boosted iPhone demand as Apple might have hoped. According to the well-informed Apple analyst Ming-Chi Kuo, there is no evidence of increased demand for iPhones due to these AI capabilities.
Kuo conducted a survey among companies in Apple’s supply chain, which revealed no rise in demand for iPhone parts. He believes the appeal of Apple Intelligence has considerably diminished. This contrasts with cloud-based AI services like OpenAI’s ChatGPT or Google’s Gemini, which have rapidly progressed and attracted more users over time.
Apple seems to indirectly agree with Kuo’s assessment. The company estimates iPhone sales for 2025 to be between 220 to 225 million units, slightly above the 220 million units sold in 2024. This is below the market consensus, which expects sales to reach 240 million or more. This conservative outlook reflects Apple’s cautious stance.
Apple is also facing challenges in China, where it lost market share. In December 2024, Apple sold 10 to 12 percent fewer iPhones compared to the same month the previous year, while the overall Chinese market only slightly declined. Kuo predicts a further six percent drop in the first half of 2025 in China, even with the expected launch of the new iPhone SE 4 during this period. This could lead to a noticeable loss of market share for Apple in this crucial market.
An unexpected detail might hinder Apple’s success with the next iPhone generation in China, expected in fall 2025. Kuo reports that two upcoming iPhone models are so thin that they may only support eSIMs, which are not widely available in China.
Overall, Apple Intelligence has not driven the expected increase in iPhone demand. The company’s cautious sales forecasts and challenges in China indicate that Apple needs to address these issues to maintain its market position. The future success of Apple Intelligence and the iPhone will depend on how Apple adapts to these challenges and meets consumer expectations.