Apple will unveil its iPhone 17 lineup on Tuesday, with artificial intelligence (AI) expected to be the headline feature as the company battles growing scrutiny over its innovation pace and rising production costs.
The event, tagged “Awe Dropping” in official invitations, came at Apple’s traditional launch window for new iPhones, the company’s most important revenue driver. Yet, while iPhones remain a premium staple in the global smartphone market, analysts say Apple faces mounting pressure to prove it can keep up with rivals in the generative AI race.
“Apple’s perception as being ‘late to the AI party’ presents a significant challenge,” market tracker Canalys noted in an analyst briefing. “While iPhone challengers powered by Google-backed Android have aggressively advanced AI integration, Apple’s slower rollout of first-party AI features has created adoption gaps, with people delaying new iPhone purchases.”
Apple introduced its “Apple Intelligence” AI features late 2024, but fell short of expectations. The biggest disappointment, analysts said, was Siri, which many users hoped would receive a major overhaul but remained basic in its functionality.
Reports suggest Apple is preparing a deeper integration of AI into its products, including a revamped Siri and a push into online search next year, potentially through a partnership with Google. However, expectations remain tempered.
“I will be surprised if there is a major announcement regarding Apple’s AI strategy,” said Forrester analyst Thomas Husson. “I am afraid that Apple’s incremental innovation approach with the iPhone 17 will start reaching its limits – especially for those who are hungry for more innovation.”
This year’s spotlight is likely to be on hardware design. Industry watchers expect the iPhone 17 to debut an ultra-thin “Air” variant, signaling a strategic shift from screen size to slimness as the new premium differentiator. Analysts suggest such a design could also serve as a precursor to a foldable iPhone in the coming years.
But thinness comes at a price. Engineering trade-offs often reduce battery space while increasing production costs — challenges Apple must navigate carefully, especially under current global headwinds.
In the United States, prices of the new iPhones are projected to rise as tariffs imposed by President Donald Trump add to Apple’s manufacturing expenses. China remains Apple’s primary production hub, making the company particularly vulnerable to shifting trade policies.
“Apple is navigating a delicate balance between its two largest markets – the US and China – amid rising trade tensions,” Canalys observed. “A weaker US dollar now allows Apple to increase prices in the US while maintaining competitive pricing abroad.”
CEO Tim Cook recently confirmed the financial toll. According to him, Trump’s tariffs cost Apple $800 million last quarter, with an estimated $1.1 billion hit expected in the current quarter.
