Investing.com — Barclays (LON:BARC) trimmed its Apple (NASDAQ:AAPL) estimates on Wednesday, citing potential risks of the company missing guidance expectations when it reports earnings on January 30.

The investment bank said its supply chain checks indicated a lower-than-expected sell-in for the iPhone SE4 in the March quarter and ongoing wafer cuts from TSMC that could affect iPhone 16 production up to the September quarter due to six-month lead times.

According to the firm, the iPhone continues to lose market share in China, despite price reductions, as recent smartphone subsidies in the country favor lower-to-mid-tier devices, excluding high-end models like the iPhone.

For the December quarter, Barclays analysts expect results to be in line or slightly worse, with an estimated 76 million iPhone units sold compared to the street’s expectation of 77 million. On a more positive note, they project a slight beat in Services growth, estimating a 13-14% year-over-year increase due to a 15% growth in App Store revenue for the quarter.

The March quarter guidance is considered the focal point of the upcoming earnings report.

Analysts remain cautious about the guidance due to mixed iPhone data points, subdued sell-through, and concerns about downward build revisions.

“China iPhones sales are down 5% YTD despite incremental discounting,” analysts Tim Long and George Wang highlighted. Furthermore, foreign exchange headwinds are likely to impact forward guidance because of a stronger dollar.

The analysts project a March-quarter iPhone sell-in of 51 million units, slightly below the consensus estimate of 53 million.

They have cut their estimates for the quarter due to a delay in the SE4 launch, now projecting only 3 million SE4 units for the period. Some of these units have been shifted to the June quarter.

In turn, the analysts have also slightly lowered their EPS forecast for the fiscal 2025 to $7.25, down from their previous estimate of $7.27, and the Apple stock price target to $183 from $184. 

Barclays’ supply chain checks indicate that wafer cuts at TSMC are impacting production expectations for the September quarter, reducing IP16 volumes by approximately 4 million units due to the six-month lead time for wafer starts.

Alongside guidance, investors are also likely to focus on China’s revenue growth and capital expenditures (capex) in the upcoming report. While capex may draw attention, the analysts expect Apple to maintain its current quarterly capex cadence in the near term.

“We think AAPL’s capex spend should eventually rise due to investments in the internal ASIC for AI servers, though the ramp might be slow and light in overall scale. As investor attention shifts to IP17, a lack of hardware features for this product could further disappoint,” analysts noted.

Regarding Apple’s AI initiatives, the market’s response to Apple Intelligence has been weaker than expected, with key features like the updated Siri engine and additional language support not anticipated until March 2025 or later.

This, coupled with regulatory restrictions in the EU and China, is seen as limiting the near-term adoption of AI features on Apple’s devices, according to Barclays.

“We think AAPL needs to find a local AI partner in China and provide Chinese language AI availability before AI features can be adopted there,” Long and Wang said.

The analysts highlighted several more downside risks for Apple, including a sluggish iPhone replacement cycle, market share losses in China to Huawei and local competitors, and regulatory challenges, including ongoing lawsuits and potential App Store risks from the Epic court case.