Apple’s new iPhone 16 failed to generate excitement among investors, partly because its anticipated Artificial Intelligence (AI) features are still in testing. The company’s shares dropped 1.7% on Tuesday, following the unveiling of the iPhone 16, which integrates AI at the hardware level for improvements to Siri and the camera. However, these features are not expected to be fully available until next month in beta form, which might delay some customers from upgrading to the new model.

The overall message from Apple seemed to suggest that significant enhancements will come next year, according to Needham analyst Laura Martin. Additionally, Apple did not specify when the AI features would be fully operational or announce a Chinese partner to support its AI efforts.

The absence of AI features in the new iPhones has drawn criticism in China, where the government requires generative AI-based chatbots to be vetted before release. The hashtag “iPhone 16 Chinese version doesn’t support AI yet” garnered 11.33 million views and over 1,500 comments on Weibo.

One user questioned the value of the iPhone 16 without AI capabilities, while another suggested that the device should be significantly discounted in the absence of AI as a key feature.

Despite these critiques, Apple did not increase the price of the new iPhones, a decision seen by Wall Street analysts as sensible given the current consumer reluctance to spend on high-priced items. In contrast, Huawei’s newly unveiled Mate XT tri-fold smartphone is priced at $2,800.

Although production limitations and the high price may limit the phone’s impact on shipments, according to IDC’s Will Wong, the Mate XT signals Huawei’s ongoing leadership in tech and poses a significant challenge to Apple beyond just market share.

The Mate XT has already garnered over 4 million pre-orders, with no deposit required, according to Huawei’s website. The device features an AI assistant with text summarization, translation, and editing capabilities, as well as AI-enhanced image editing functions, like cropping out unwanted parts of photos.

Huawei’s recent successful smartphone launches highlight its ability to thrive despite US sanctions and strengthen its competitive position against Apple in China. In contrast, Apple’s sales in China have declined after years of strong growth, causing its ranking in the world’s second-largest economy to drop from third to sixth place.

iPhone shipments in China fell by 6.7% in the second quarter of 2024, as reported by Canalys. Huawei’s return to the high-end smartphone market was marked by the launch of the Mate 60 Pro, which surprised both analysts and US officials due to its use of domestically produced chips, circumventing US sanctions that restricted access to the global chipset supply chain.

Both the Mate XT and iPhone 16 are set to be released on September 20.

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