Shares of key Apple (NASDAQ:AAPL) suppliers slid on Monday following a cautious note from TF International Securities, which indicated that demand for the iPhone 16 Pro series was lower than expected.
Cirrus Logic, Inc. (NASDAQ:CRUS) dropped 6.4%, Qorvo (NASDAQ:QRVO) fell 7.4%, Skyworks Solutions (NASDAQ:SWKS) declined 6.7%, Micron Technology (NASDAQ:MU) slipped 5.2%, Broadcom (NASDAQ:AVGO) dipped 2.7%, and Taiwan Semiconductor (TSM) shed 2.9%.
The analyst note from TF International Securities estimated iPhone 16's first-weekend pre-orders at about 37 million units, marking a 12.7% year-over-year decline compared to the iPhone 15.
The report highlighted that weaker-than-anticipated demand for the iPhone 16 Pro series was the primary driver of the sales drop.
"The delivery times of the iPhone 16 Pro series are significantly shorter than those of the 15 Pro series," analysts said, which suggests lower-than-expected demand, citing data from their latest supply chain survey and pre-order results from Apple's official websites.
One of the key issues identified in the report is that Apple Intelligence, a major feature for the iPhone 16 Pro, was not available at launch, which may have dampened enthusiasm.
Additionally, heightened competition in China continues to pose challenges for iPhone demand.
Despite the lackluster start for the iPhone 16 Pro series, analysts noted that Apple's supply chain production plans are unlikely to change significantly in the near term, with potential sales boosts still possible from future product releases and holiday promotions.
As a result, Apple suppliers took a hit amid concerns that weaker iPhone sales could impact their revenue.
Following the note from TF International, Evercore ISI took a more positive stance.
The firm stated: "In aggregate, given the staggered launch of both Apple Intelligence across geographies and AI features we think the mix data set is logical – Pro Max is modestly weaker vs. iPhone 15, Pro models are doing fairly well notably in China where they are competing with Huawei's new Mate X product."
Evercore also thinks it is notable that iPhone 16 Pro demand appears to be the strongest in the US and UK where Apple Intelligence will be more quickly available. "We continue to expect a 'stronger for longer' iPhone cycle given the staggered nature of the Apple Intelligence rollout," added the firm.
Overall, they believe the delivery times point to strong y/y demand for Pro models and relatively stable to slightly down demand for the base and Pro Max models.
"[It is] unclear how much of an impact supply may be having on shorter delivery times, but we think this supports the thesis of a more gradual uptick in iPhone sales as Apple Intelligence features are rolled out," added the firm, maintaining an Outperform rating and $250 target on the stock.