14 Products Apple Is Saying Goodbye To In 2025

Apple executed a broad 2025 product rationalization, discontinuing multiple legacy SKUs including the iPhone 16 Pro and 16 Pro Max and the entire iPhone Plus line, iPad 10, Apple Watch Series 10/SE2/Ultra 2, MacBook Air M2/M3, two Mac Studio variants (M2 Max and M2 Ultra), and AirPods Pro 2. The moves consolidate sales around new models (iPhone 17 family, iPad 11 with A16, MacBook Air M4 at $999/13" and $1,199/15", AirPods Pro 3 at $249), which should simplify SKUs and could improve margins and manufacturing economics, while isolated safety reports about AirPods Pro 3 ear injuries constitute a modest reputational risk.

Analysis

Market structure: Apple’s 2025 SKU pruning favors higher-margin newer SKUs (M4 MacBooks, M4 Max base pro, AirPods Pro 3, Watch Ultra 3) and consolidates channel SKUs; expect near-term component demand to reallocate toward TSMC (TSM) wafer demand and higher-spec RF/PMIC suppliers (beneficiaries: TSM, AVGO) while older-touch accessory vendors face a 3–8% volume decline over 2–3 quarters. Retailers and refurb channels that leaned on discounted legacy iPhones/iPads will see transient margin compression; ASP lift of 50–150bps is plausible as Apple retires low-end Plus and shifts customers toward Air/Air/Services tie-in.

Risk assessment: Tail risks include a product-safety recall from AirPods Pro 3 (estimate 5–15% probability in next 90 days) that could hit wearables revenue and sentiment, and a supply shock if TSMC capacity tightens around M4 ramp (risk to gross margins). Time horizons: immediate (days) for sentiment/recall headlines, short-term (1–3 months) for channel inventory digestion and holiday comps, long-term (3–12 months) for margin and services lift. Hidden dependencies: trade-in/resale flows, services attach elasticity, and manufacturing cost curves (M3 vs M4 unit economics).

Trade implications: Initiate a modest 2–3% long AAPL position via stock or a 6–12 month call spread (buy 6–9 month AAPL 5%–10% OTM call, sell 15% OTM) to capture expected 6–12 month EPS lift from SKU rationalization and M4 margin tailwinds; hedge with 0.5–1% notional 3-month AAPL 5% OTM puts to guard against a recall shock. Add 1–2% long TSM (beneficiary of M4 wafer demand) as a relative-value play; rotate 1–2% from retail/accessories names into semiconductor suppliers over the next 90 days.

Contrarian angles: Market may underprice structural margin upside from SKU consolidation—if Apple secures M4 yields and swaps M3 SKUs out, EPS could be +5–8% over 12 months (trigger: gross margin +100bps QoQ). Conversely, consensus underestimates recall/regulatory risk; if CPSC/FDA action occurs within 30–60 days, AAPL downside >5% would be a buying opportunity—add size if price gap exceeds 6% on confirmed recall or if guidance lowers services growth by >200bps.

Key Decisions for Investors

• Establish a 2–3% long AAPL position over 1–12 months via shares or a 6–12 month 5%–10% OTM call spread (buy lower strike, sell higher strike ~15% OTM); target 10–15% upside in 6–12 months tied to ~100–150bps gross margin improvement.
• Buy 1–2% position in TSM (TSM) with 12-month horizon to capture M4 wafer demand; exit or trim if TSM reports capacity/time-to-yield misses or if foundry gross margins compress >200bps QoQ.
• Purchase downside protection: allocate 0.5–1% notional to AAPL 3-month puts ~5% OTM (or buy a put calendar) to guard against a product-recall headline; if a formal recall/CPSC notice occurs within 30–60 days, increase hedge to 2% notional and consider shorting 1–2% via puts.
• Rotate 1–2% from consumer-accessory/retail exposure into semiconductor and services-focused names over next 60–90 days; specifically reduce exposure by ~50% in small-cap accessory vendors that rely on legacy AirPods/iPhone SKUs.