Picture used for illustrative purposes.

Apple on Monday announced a new iPhone built for generative artificial intelligence as it seeks to boost sales and show it is keeping up in the technology race.

The tech giant has a lot riding on what would be the iPhone 16 and will hope that customers are enticed to buy the latest models, attracted by new AI powers.

"We are thrilled to introduce the first iPhones designed from the ground up for Apple Intelligence and its breakthrough capabilities," Apple chief executive Tim Cook said at a event at the iPhone-maker's Silicon Valley headquarters.

With $39 billion in sales last quarter, the iPhone counts for roughly 60 per cent of Apple's revenue, and remains the main entryway to the company's services, such as the App Store or Apple TV, which are becoming a growing part of its business.

Apple is only just coming out of a long sales slump as users increasingly stick with older models longer.

"This iPhone 16 release is all about Apple Intelligence and the unleashing of the consumer AI Revolution through Cupertino," Wedbust analyst Dan Ives said in a note to investors, referring to Apple's home city.

"With Apple Intelligence on the doorstep, in essence Cupertino will be the gatekeeper of the consumer AI Revolution."

"Apple Intelligence" is a new suite of software features for all devices that was announced in June at the company's annual developers conference, where it also announced a partnership with ChatGPT-maker OpenAI.

In the short-term, these include AI-infused image editing, translation, and small, creative touches in messaging, but not more ambitious breakthroughs promised by other AI players, such as OpenAI or Google.

Ives expects software makers to being cranking out apps and services tuned with generative AI capabilities, fueling sales of iPhones.

Apple also unveiled an updated Watch at an event on Monday focused on its AI-enhanced iPhone 16,

The new Series 10 Watch is thinner than its predecessor and has its biggest screen. Apple shares were down less than 1% in midday trading.

Apple unveiled Apple Intelligence at its developer conference in June, its take on generative AI that can conjure text, images and other content on command.

But these upgrades will take time to reach consumers.

Apple Intelligence features are expected to launch in a software update to the iPhone and iPad operating system likely in October and a full upgrade of Apple's voice assistant Siri is likely to come only early next year, according to media reports.

Reuters