iPhone needs an update prior to being activated

Thank you kindly for your reply, jpmaynes.

There is no way that I know of to update a brand new iPhone without first connecting to wi-fi, ready for activating. and then updating it. If you purchased the iPhone in an Apple Store, (or even elsewhere), you may want to make a reservation and get help from the experts in an AppleStore: Genius Bar Reservation and Apple Support Options - Apple

If there are no Apple stores nearby:

There's online or phone support just a click and a few minutes away from the [Need help? .. call or chat} link in this article: Set up iPhone - Official Apple Support

Else:

If you are restoring a previously owned (new to you) iPhone 12:

Apple Support has an online article to help with that:

How to: Restore an iPhone, iPad or iPod touch that needs a newer version of iOS or iPadOS – Apple Support

There are other "set-up" guides available, yet none that help update before setting up:

How to: Use Quick Start to transfer data to a new iPhone or iPad – Apple Support

How to: Set up your iPhone or iPad - Apple Support

How to: Turn on and set up iPhone – Apple Support

Wondering if you are using your old iPhone to transfer data to your new iPhone. If so, it may be the old iPhone that needs updating to the latest iOS 16.4.1

Eg: You might want to check through this method of setting up:

How to: Set up iPhone - Official Apple Support

All the best :-)