Less than a year after introducing its artificial intelligence capabilities, Apple is bringing the feature to its most affordable iPhone.
On Wednesday, the company unveiled an iPhone that will cost $599 and feature an A.I. system it calls Apple Intelligence. The device brings A.I. features like notification summaries and writing recommendations in English to the company’s lowest-priced iPhone model as it prepares to expand those features to other languages in the coming months, including Chinese, Portuguese and localized English for India.
The new phone, which Apple is calling the iPhone 16e, does not feature a home button or Touch ID, which have been phased out. Instead, the phone is unlocked with a facial recognition system, Face ID, which has been available on most iPhones since 2017.
The iPhone 16e is the first update to the company’s lowest-priced smartphone line since 2022, replacing the company’s iPhone SE. The cheaper phones have helped Apple get its signature product into the pockets of price-sensitive customers, who often trade up for more expensive models the next time they buy a phone.
Apple is introducing the new iPhone at a critical juncture. The company’s iPhone business has been in a slump, with sales down 2 percent from their peak of $205.5 billion in 2022. Tim Cook, Apple’s chief executive, has chalked up some of the iPhone’s struggles to the limited availability of Apple Intelligence, which was announced months before it became available and is offered only on the company’s newest models in English-speaking markets like the United States. In a call with analysts last month, Mr. Cook said the new A.I. features drove iPhone sales in markets where it was available.
But surveys have found that A.I. hasn’t been a major reason that people are buying new phones, said Jeff Fieldhack, research director at Counterpoint Research, a market research firm. “People are buying phones for the same reasons they always have: The battery isn’t recharging or the phone is aging and not working,” he said.
Apple’s business also stands to benefit from raising the price of its introductory model. The iPhone 16e is 40 percent more expensive than the last iPhone SE, which cost $429. The increase means that Apple stands to collect $170 more on each of the lowest-priced iPhones it sells. That will lift total sales at a time when the number of phones it sells has been relatively stable, at about 230 million phones a year.
The higher price comes after President Trump imposed a 10 percent tariff on all imports from China. Apple makes a majority of its iPhones in China, but its decision to increase prices on its lowest-priced iPhone is probably unrelated, said Richard Kramer, partner at Arete Research, a stock research firm.
“These decisions are made months before action is taken,” Mr. Kramer said. “This is the start of Apple lifting prices across the range at a time when volume growth is pretty moribund.”
Extending the availability of Apple Intelligence is critical to the company’s efforts to fend off rivals and expand sales overseas. In China, Apple’s second-most-important market, the company’s share of smartphone sales fell 2.4 percentage points last year to 15.5 percent, as rivals like Huawei gained ground, according to Counterpoint Research.
In India, one of the world’s fastest-growing smartphone markets, the iPhone 15 was the best-selling smartphone in the final three months of last year, Counterpoint said. The device’s popularity helped Apple increase its market share in India by two percentage points to 11 percent.
With the iPhone 16e, Apple is introducing its first custom-designed modem chip, the C1. The chip provides 5G connectivity and replaces the modem chips provided by Qualcomm. Apple has been developing the chip since 2019, when it settled a lawsuit against Qualcomm over the chipmaker’s licensing fees and bought Intel’s modem business.
Ben Bajarin, chief executive of Creative Strategies, a tech research firm, said the new modem chip wouldn’t have all the features of Qualcomm’s modems, but would allow Apple to test the component before incorporating it into future iPhone releases. Eventually, he said, Apple’s custom modem will improve the battery performance of iPhones and bring wireless connectivity to other Apple products.
“Is it going to come to an iPad? Is it going to come to a Mac? How far can they take this?” Mr. Bajarin said.
Apple introduced the iPhone 16e with less fanfare than usual. The company posted a 13-minute film on its website with Mr. Cook describing the new phone. When it introduced the iPhone SE in 2022, it held a one-hour event at its headquarters in Cupertino, Calif.
