Apple's (AAPL, Financial) latest iPhone 16e is unlikely to excite consumers, and China's smartphone sales growth is weakening, according to Jefferies analysts led by Edison Lee.

Industry checks suggest China's smartphone sales have declined for four consecutive weeks post-Chinese New Year (CNY), with year-over-year declines worsening. Rising discounts on iPhone 16 models and Android flagships indicate slowing demand.

The iPhone 16e began shipping on February 28, but Jefferies believes it lacks appeal. A specification and price comparison with the iPhone 14 and 15 shows minimal differentiation, with AI features failing to gain traction.

China's only week of strong smartphone sales was during the first week of government subsidies before CNY, but demand has since turned negative. Huawei was the only brand to show positive growth, likely due to an easier year-over-year comparison and aggressive discounts. Meanwhile, Honor and iPhone saw the worst declines.

Jefferies warns Apple may cut production in the next two quarters if demand continues to weaken, as rising platform discounts suggest government subsidies aren't enough to drive sustained sales.