Initial feedback for the iPhone 16 is not great, but not terrible either: KeyBanc

Investing.com -- According to a recent note from KeyBanc Capital Markets, the initial feedback for Apple (NASDAQ:AAPL )'s iPhone 16 suggests that demand is "not great, but not terrible either."

While there were concerns that pre-orders were down double digits year-over-year, KeyBanc said in a note Tuesday that demand has not been as bad as some had feared.

"Attribution to why demand has not been great has been due to the lack of compelling functionality in Apple Intelligence and the lack of language support in key regions, such as China," explained KeyBanc.

Despite the lukewarm demand, KeyBanc reports that supply chain partners have yet to see any reductions in build plans, which currently stand at 89 million units, marking a 2% increase year-over-year in the second half of 2024.

This is said to indicate that while enthusiasm may be muted, Apple has not adjusted its production expectations.

The note also highlights mixed results from KeyBanc's September carrier survey, with feedback on the iPhone 16 launch being "slightly disappointing."

However, Apple Store spending data shows a 15% year-over-year increase during the first ten days of the launch and a 7% year-over-year rise during the launch weekend, suggesting some positive traction despite initial concerns.

Additionally, shortening lead times for the iPhone 16 appears to be the result of better manufacturing yields rather than weak demand, according to KeyBanc.

While the overall outlook for the iPhone 16 isn't overwhelmingly positive, the supply chain feedback indicates that the situation isn't dire either. As KeyBanc puts it, "Initial feedback for the iPhone 16 is not great, but not terrible either."

Source: Investing.com