Apple Plans To Add Generative AI To IPhone To Increase Sales In China Market

Apple will soon add AI capabilities to increase sales (photo: x @apple)

JAKARTA - Apple's plan to add generative artificial intelligence to its iPhone and revive sluggish sales in the Chinese market will be focused on Thursday, May 2, when the tech giant reported its biggest quarterly revenue decline in more than a year.

So far Apple has been considered a compulsory stake in Wall Street. However, Apple's shares have come under the performance of other Big Tech companies in recent months. Their shares have fallen more than 10% so far this year in line with growing concerns about the slow launch of artificial intelligence services (AI). In addition, Huawei has bounced back and seized market share in China, which is certainly disrupting Apple's market.

The analysis saw on average the sales of the iPhone, which accounts for about half of Apple's revenue, down 10.4% in the first three months of 2024, according to LSEG. The decline has fallen in more than three years.

Analysts expect Apple's total revenue to drop 5% in the second quarter, covering January to March. This will be Apple's biggest revenue drop since the December 2022 quarter, when revenues drop 5.5%.

Previously, Apple this year had lost the crown as the largest company in the world to Microsoft. Even Apple's market value now stands at 2.68 trillion US dollars after its share price decline in 2024.

Weak revenue and falling stocks have put pressure on Apple to refresh its flagship devices after years without major upgrades.

The company is in talks with Alphabet's OpenAI and Google to add agen-AI feature to the iPhone to be announced in its biggest annual developer conference expected to take place in June, Bloomberg News reported.

Analysts believe such AI integration could prompt demand for the next iPhone series, which is expected to be announced in the fall.

Although executives at Microsoft, Alphabet, Meta Platforms, and other major tech companies have been talking about their AI strategy in quarterly conference calls in recent months, Apple CEO Tim Cook has discussed its plans for the developing technology to be much less.

Adding the AI feature to the iPhone can also help Apple compete better with Huawei and Samsung Electronics, which reclaimed the title as Apple's top smartphone vendor earlier this year. This was driven by demand for AI features in its Galaxy S24 smartphone.

"The economic wind of replacement cycles and additional generative AI features make Apple ready for a strong iPhone 16 cycle," said Bernstein analyst Toni Sacconaginhi this week, raising the company's stock rating to an "outperform" of "markets."

"We believe China's ongoing weaknesses are more cyclic than structural, and it should be noted that Apple's Chinese business has historically shown much higher volatility than Apple as a whole, given its very feature-sensitive user base."

Thursday's revenue will also be closely monitored for updates on plans to buy back shares of the company and Vision Pro, Apple's first major product in years to be available on shelves in February.

After initial enthusiasm, there are signs that demand is slowing for the $3,500 device, where an analyst said this month that Apple has withdrawn its production forecasts for the mixed reality headset.

The company's remaining hardware business is also affected by weak demand, where sales of the iPad and Mac are expected to drop by 11.4% and 4.3% in the March quarter, respectively.

Apple has indicated that it is tightening their focus on the device, which is also hindered by a lack of major upgrades.

The company will host an event this month in which a refreshable iPad line-up is expected to be announced and media reports have said they plan to update each Mac model with an M4 processor that is faster and focuses on AI.

The service business - which includes revenue earned from App Stores and subscription services like Apple TV - is expected to remain a bright spot with revenue growth of 7.7%.