Apple’s manufacturing partners are struggling to supply enough components, forcing the company to lower its targets.
Apple Inc. is expected to cut its 2021 iPhone 13 production targets by 10 million units as prolonged chip shortages hit its flagship, according to people with knowledge of the matter.
The company expected to produce 90 million new iPhone models in the last three months of the year, but now tells its manufacturing partners the total will be lower as Broadcom Inc. and Texas Instruments Inc. have struggling to provide enough components, said the people, who asked not to be identified because the situation is private.
The tech giant is one of the world’s largest chip buyers and sets the annual pace for the electronics supply chain. But even with strong purchasing power, Apple is grappling with the same supply disruptions that have wreaked havoc on industries around the world. Major chipmakers have warned that demand will continue to exceed supply throughout next year and potentially beyond.
Apple obtains display parts from Texas Instruments, while Broadcom is its long-time supplier of wireless components. An insufficient number of TI chip for the latest iPhones is tied to the power supply for the OLED display. Apple is also facing component shortages at other vendors.
Apple and TI representatives declined to comment. Broadcom did not respond to a request for comment.
Apple shares fell 1.6% to $ 139.27 late in the day after Bloomberg broke the news. The stock was up 6.6% this year through Tuesday’s close. Broadcom and TI have also plunged into after-hours trading.
Shortages have already weighed on Apple’s ability to ship new models to customers. The iPhone 13 Pro and iPhone 13 Pro Max went on sale in September, but orders won’t ship from Apple’s website for about a month. And the new devices are listed as “currently unavailable” for pickup at several of the company’s retail stores. Apple’s partner carriers are also seeing similar shipping delays.
Pending orders are expected to ship around mid-November, so Apple could still deliver the new iPhones to consumers in time for the crucial holiday season. The year-end quarter is expected to be Apple’s biggest sales blitz to date, generating around $ 120 billion in revenue. That would represent an increase of around 7% from the previous year – and more money than Apple made in a year ten years ago.
Apple’s woes show that even the king of the tech world is not immune from global shortages made worse by the pandemic. In addition to dealing with limited iPhone availability, the company has struggled to get enough out of the Apple Watch Series 7 and other products.
Earlier this year, Apple warned it would face iPhone and iPad supply constraints in the quarter that ended in September. The Cupertino, California-based company cited global chip shortages at the time. That period included roughly a week and a half of iPhone 13 revenue.
Broadcom does not have significant factories and relies on contract chipmakers like Taiwan Semiconductor Manufacturing Co. to manufacture its products. Texas Instruments manufactures some chips in-house, but also relies on external manufacturing. This means that they are part of an increasingly difficult fight to secure the production capacity of TSMC and other foundries. Apple is itself a TSMC customer – in fact, it’s the company’s most important. Apple uses the manufacturer to make its A-series processors, but they don’t appear to be in danger of a shortage just yet.
There are signs that the crisps crunch is getting worse. Industry lead times – the gap between ordering semiconductors and receiving delivery – increased for the ninth consecutive month to an average of 21.7 weeks in September, according to Susquehanna Financial Group.
To help unravel supply chain grunts, the U.S. Department of Commerce is asking global chipmakers to complete a series of questionnaires by November 8, but the effort is meeting resistance from lawmakers and lawmakers. leaders of Taiwan and South Korea.
US Secretary of Commerce Gina Raimondo tweeted earlier this week about a proposed $ 52 billion plan to support chipmaking in the United States. Japanese Prime Minister Fumio Kishida also said he would work to establish a chip production base in his country.
Meanwhile, a protracted energy crisis in China could add to the headaches for the iPhone maker. Apple supplier TPK Holding Co. said last week that subsidiaries in southeast China’s Fujian Province were shifting their production schedules due to local government electricity restrictions. It comes less than two weeks after iPhone assembler Pegatron Corp. adopted energy-saving measures amid government-imposed power restrictions.