Chip bottlenecks on iPads and Macs can cool off Apple’s scorching section

NEW YORK, NEW YORK – SEPTEMBER 20: Apple CEO Tim Cook greets customers at the reopening of Apple’s flagship retail store, Apple Fifth Avenue on September 20, 2019 in New York City.

Taylor Hill | WireImage | Getty Images

After a shockingly strong quarter, in which Apple’s sales jumped 54% to nearly $ 90 billion in sales and double-digit growth in every product category, Wall Street is already wondering if Apple can hold out the rest of the year can.

While Apple has not presented any official guidelines for the future since the beginning of the pandemic, CFO Luca Maestri said Apple will again grow “double-digit” in the quarter ending in June.

But there were some limitations.

It turns out that Apple is dealing with the same microchip shortage that has puzzled companies and industries around the world, despite its legendary operating group, built by CEO Tim Cook that has included key components at competitive prices for years.

Apple announced on Wednesday that third-quarter sales are expected to be between $ 3 billion and $ 4 billion if there weren’t any delivery issues, especially for iPad tablets, Mac laptops and desktops. (Analysts polled ahead of Wednesday’s earnings believe Apple will generate roughly $ 70 billion in revenue in the next quarter.)

According to Cook, Apple’s problem was primarily with “legacy node” chips, which use older manufacturing methods, versus the state-of-the-art, high-performance chips that power the heart of its devices.

Cook hasn’t specified which parts are in short supply, but Apple is buying many older node chips for functions that transmit data to displays, power cameras, decode audio, and manage batteries.

“Most of our problem is with the licensing of these legacy nodes. There are a lot of different people not only in the same industry but in other industries using legacy nodes,” Cook said, adding that he did not know exactly how much demand there is for these nodes production capacities could come from competitors and other industries.

Ultimately, Apple was optimistic, especially when compared to companies in other industries like cars, which have been warning of chip shortages for months. For example, Ford said on Wednesday that it would lose half of its production in the second quarter due to the lack of microchips.

Apple emphasized that part of the reason for forecasting supply bottlenecks in the current quarter was due to massive demand. IPad sales grew 79% and Mac sales increased 70% last quarter. So there are clearly a lot of people who want to buy them.

“For Mac, for example, if you put it into context, Mac’s last three-quarters was the top three-quarters in this history of the product, right?” Said Maestri.

If there is one company that can meet the challenges of the chip supply chain, it is Apple, which purchases huge quantities of components every year and is a customer important enough to continue to be a priority for chip makers and designers to have.

One reason Apple blew out in the second quarter is that there weren’t any product shortages during the reporting period, Cook said, attributing this to the company’s supply chain expertise.

“How can we do that? You’re going to break all of your buffers and offsets. And that happens all the way down the supply chain. So you can go a bit higher than we expected when we went into the neighborhood.”

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