Apple iPhone 16 Discounts in China Indicate Underwhelming Demand

Wall Street Analysts' Expectations

Wall Street analysts had high hopes for a supercycle of upgrades this fall, driven by the new AI-powered iPhones. However, evidence is already emerging that suggests the demand for these smartphones is not as high as anticipated.

Price Discounts in China

The most recent evidence comes from China, the world's largest smartphone market. Online retailers in the country have already begun offering price discounts on the new iPhone 16 series. The South China Morning Post has reported on these discounts, which indicate a lackluster demand for the new iPhones.

Discounts on Major Online Retailers

PDD Holdings' Pinduoduo, a popular e-commerce platform in China, is selling the iPhone 16 Plus with 512 gigabytes of storage for 8,999 yuan (US$1,268), a 10% discount from the official price of 9,999 yuan. The 128GB iPhone 16 is being sold at an even steeper 11% discount. Both Pinduoduo and Alibaba Group Holding's Taobao marketplace have applied a 4% discount to the 256GB version of the high-end iPhone 16 Pro Max, reducing the price by 400 yuan to 9,599 yuan. Alibaba's Tmall shopping platform also offers buyers the option to pay for a new Apple handset in 24 instalments without interest charges.

Less Demand for iPhone 16 Pro and iPhone 16 Pro Max

The discounts in China came after TF International Securities analyst Kuo Ming-chi's US pre-order analysis report on Sunday. The report found less demand for the iPhone 16 Pro and iPhone 16 Pro Max, and more demand for base models. Some consumers questioned whether Apple's promise to roll out the AI function in Chinese-speaking regions would cover the mainland, where generative AI technology is heavily regulated. "The absence of AI in China is akin to cutting one of Apple's arms," one blogger said on Weibo. One popular comment read, "With the biggest selling point unavailable, shouldn't you charge us half the price?"

Competition in China

Meanwhile, Huawei's share of smartphone sales in China continues to grow. Last quarter, the market tracker IDC showed that the Chinese tech giant had a 50% market share. Other brands, including Vivo and Xiaomi, also outpaced Apple, which fell to sixth place among handset makers in the country.

Reconsidering the AI Supercycle

Given these developments, Wedbush analyst Dan Ives may need to reconsider his prediction of a grand iPhone upgrade supercycle driven by AI.

Bottom Line

It seems that the anticipated AI-fueled upgrade supercycle for the new iPhones may not be materializing as expected. The discounts offered by major online retailers in China, the world's largest smartphone market, suggest underwhelming demand for the new devices. This situation raises questions about the effectiveness of AI as a selling point, especially in regions where its use is heavily regulated. What are your thoughts on this matter? Share this article with your friends and let us know your views. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.