The Global chip shortage continues to affect phones, cars, and now Apple. This is affecting the iPhone’s most valuable revenue generator.
A Bloomberg report claims that Apple will reduce its production targets for the iPhone 13 series in 2021 by as much as 10 million units. People familiar with the situation say this is due long-term chips shortages, which are currently affecting Apple’s flagship smartphone line.
Apple originally intended to make 90 million iPhone 13 family models by year’s end, but this number will now be around 80 million.
Broadcom and Texas Instruments (TI), reportedly are unable to supply enough components in time. This is partly why the number is lower. Apple buys components for its display chips from TI while Broadcom has been a supplier of wireless components for many years. The problem with TI is the chip that powers Apple’s OLED display. However, other suppliers are also facing component shortages.
Apple’s strong purchasing power has protected it from the continuing shortage of chips in the electronics sector. But that is no more the case. According to major chipmakers demand will continue to exceed supply for the next year and possibly beyond. This is not an area that will change anytime soon.
Apple shares plunged as much as 1.6% to $139.27 after Bloomberg reported the news. The stock gained 6.6% this year through Tuesday’s close. After-hours trading saw Broadcom and TI both fall.
The shortages have already impeded Apple’s ability ship new models to customers. Although the iPhone 13 Pro Max and iPhone 13 Pro Max were launched in September, orders placed through Apple’s website may take up to a month for delivery. The company also states that the new devices are “currently unavailable” to be picked up at some of its retail locations. Apple’s carriers partners are experiencing similar delays.
Apple is expected to ship current orders in mid-November so that the new iPhones can still be delivered in time for Christmas. Apple is expecting the year-end quarter to be its most profitable, with revenues of approximately $120 billion. This is a 7% increase over a year ago and more than Apple made in one year a decade ago.
The brand had previously struggled to keep up with the demand for its new Apple Watch Series 7 as well as other products.
Broadcom doesn’t have its own manufacturing facility and relies instead on contract chipmakers like Taiwan Semiconductor Manufacturing Co. (TSMC) for its products. Texas Instruments produces some chips in-house, but it also outsources other chips. Apple is a customer of TSMC; it is actually the largest. The company makes Apple’s A series processors, but it doesn’t seem to have any shortages.