CUPERTINO, California: Apple is expanding its lineup with a new budget-friendly device, the iPhone 16e, aiming to attract cost-conscious buyers while incorporating artificial intelligence (AI) features.

The company unveiled the device this week, positioning it as a competitor to mid-range Android smartphones from Samsung and Huawei.

At $599, the iPhone 16e is a departure from Apple's SE naming convention for its lower-cost models. It comes with a powerful A18 chip, ensuring compatibility with Apple Intelligence, the company's AI-driven features that include access to ChatGPT. This move signals Apple's push to make AI a standard across its devices while reaching markets where upfront costs matter, such as China and Europe.

"The 16e will likely help Apple in cost-sensitive markets where buyers tend to pay for phones upfront," said Ben Bajarin, principal analyst at Creative Strategies.

Apple recently forecast strong sales growth following a dip in iPhone sales, banking on AI enhancements to drive adoption. However, analysts remain cautious, as these AI capabilities will roll out gradually in select regions.

Unlike previous SE models, which were known for their smaller screens, the iPhone 16e features a 6.1-inch display, the same size as the base iPhone 16. It also introduces the C1 chip, Apple's first in-house modem, marking a shift away from Qualcomm's cellular connectivity components.

The iPhone 16e's design includes a notch at the top of the screen rather than the Dynamic Island cutout seen in more premium models. It will be available in only black and white, omitting the bright color options found in higher-end versions.

Apple has made some cost-cutting choices to keep the price lower. The 16e lacks a dedicated wide-angle lens, instead featuring a 48-megapixel primary camera with a two-times zoom lens. Additionally, it does not include the new camera control button, a touch-sensitive feature introduced in the iPhone 16 series.

Despite these limitations, the iPhone 16e is expected to offer a compelling option for users seeking Apple's ecosystem without the premium price tag. The company hopes this device will reinvigorate demand in the mid-range market, especially as AI becomes a key differentiator in smartphone competition.