Investing.com -- Apple's new iPhones haven't been a big hit with consumers yet as demand remains soft, UBS says, and if the release of Apple Intelligence and post-earnings commentary from the company next week doesn't point to a brighter outlook for iPhone demand, the tech giant could face risks in the upcoming quarters.
UBS said its 'evidence lab' data, which tracks iPhone availability across 30 geographies, continues to suggest demand that is "somewhat softer relative to last year less than one week before the expected launch of Apple Intelligence on October 28th in 'US English.'"
Wait times or lead times -- the delay between when customers order their devices and when they will be delivered, are often considered be a key indicator of demand.
But the current wait times for the iPhone 16 Pro Max in the US and China are approximately 17 and 16 days respectively, lower than the 22-day wait times seen last year for both markets.
This is concerning because consensus estimates assume average selling prices will increase by 4% to $928 in fiscal year 2025 and by 2% to $943 in fiscal year 2026, but softer demand poses a big threat. The launch of cheaper iPhone 16 SE also poses a risk to expectations for an increase average selling prices, if demand is skewed toward the affordable iPhone.
Data released Friday from the International Data Corp. eased concerns somewhat about weaker demand in China as the company regained its position in the list of top 5 smartphone manufacturing in China, with 15.6% share of the Chinese market, albeit down form 16.1% a year earlier.
The coming week will be the most important one yet for clues into the demand, with Apple Intelligence expected to be rolled out and Apple set to release quarterly results on Oct. 31.
If Apple Intelligence, or the AI offering, doesn't resonate with consumers, UBS warns of a "10% iPhone production or build push-out to CY25 along with compressed wait times for the 16 Pro Max versions."
This would not only create risk for Apple's December quarter but also the March and June quarters as "demand for an iPhone SE variant we expect to be launched in March could pressure ASPs in addition to sluggish unit growth," it added.
Apple Inc (NASDAQ:AAPL) was slightly higher in recent trading on Friday.