Apple’s iPhone scorching streak will encounter international chip shortage

Apple reported a blowout quarter on Tuesday, fueled by sales of iPhones, which rose 50% annually to $ 39.57 billion.

It was followed by the March quarter, in which iPhone sales grew 65.5% annually, and Apple’s vacation quarter, in which sales rose 17% to $ 65.60 billion.

The iPhone is in a hot phase, fueled by the release of the iPhone 12 last year, the first major iPhone redesign since 2017. Current iPhone users are upgrading to the first iPhone with 5G, and many people are switching from an Android phone, Apple CEO Tim Cook said Tuesday.

But Apple is now facing a problem that has preoccupied everyone from game console manufacturers to automobile manufacturers to Microsoft’s PC business: an industry-wide shortage of chips and other components.

Apple CEO Tim Cook attends the grand opening of the new Apple Tower Theater retail store at the Apple Tower Theater on June 24, 2021 in Los Angeles, California.

JC Olivera | Getty Images

On Tuesday, Apple CEO Tim Cook warned that silicon “supply bottlenecks” would affect sales of the iPhone and iPad.

Cook said the scarcity is not in the powerful processors Apple made for its devices, but rather in what are known as “legacy nodes” or chips that perform everyday functions like driving displays or decoding audio and are made with older ones can be equipment.

“Most of the restrictions that we see are of the kind that others see in my opinion, which I would classify as an industry deficiency,” said Apple CEO Tim Cook on a call with analysts.

In the case of other component bottlenecks, he attributed this to a demand that exceeded Apple’s own forecasts.

“In addition, we have some bottlenecks because the demand was so great and exceeded our own expectations that it is difficult to get the full set of parts within the lead times we are trying to get them.”

Apple had already warned in the quarter through June that delivery bottlenecks would affect the company, but those bottlenecks affected the iPad and Mac, not Apple’s flagship product. Apple had said in April that the delivery bottlenecks could hurt sales by $ 3 billion to $ 4 billion, but Cook said in an interview Tuesday that Apple was able to navigate and reduce the impact to less than expected.

“We were actually able to mitigate some of that, and we came to the lower end of that range,” Cook told CNBC’s Josh Lipton.

On Tuesday, Apple didn’t give an exact range for how the component shortage would affect the September quarter, but CFO Luca Maestri said the company expected them to “be bigger than the June quarter.”

iPhone shortages will not be doomed by Apple – it still expects slowed “double-digit” growth from the $ 64.7 billion it reported in the September quarter last year. But the admission shows that even Apple – with its amazing supply chain, operations expert CEO, and purchasing power from suppliers – could struggle to get the parts it needs to meet demand in the face of a global scarcity.

Apple stock fell about 2% after the results were released despite the hourly blowout quarter.

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