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Apple Falls on Report of Cut in iPhone Output Target Due to Chip Crunch

Stock MarketsOct 13, 2021 14:54
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© Reuters.

Dhirendra Tripathi

Investing.com – Apple stock (NASDAQ:AAPL) stock traded 0.7% lower in Wednesday’s premarket trading as concerns mount that the ongoing shortage of chips may finally come to hit production of iPhone13.

According to a Bloomberg report, the company is likely to cut its projected iPhone 13 production targets for 2021 by as many as 10 million units, or over 10%, as prolonged chip shortages hit its flagship product. 

The company had expected to ship 90 million new iPhone models in the last three months of the year, but it’s now settling for a lower number, telling manufacturing partners as much. Broadcom (NASDAQ:AVGO) and Texas Instruments (NASDAQ:TXN), Apple’s key supplier of components, are struggling to deliver, the report said. The iPad-maker is facing component shortages from other suppliers as well.

Apple gets display parts from Texas Instruments, while Broadcom supplies wireless components. 

Thanks to its heft as the world’s biggest company and one of the biggest buyers of chips, screens and most components that go into mobiles and laptops, the company had so far managed to ride out the shortage.

The lack of supplies is already reflecting in delayed deliveries of the iPhones, which were only launched last month. Orders won’t be delivered 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, Bloomberg said.

The shortage of chips worldwide has been a feature of the economy for more than a year now with no early resolution in sight. The chip industry has been unable to respond to a surge in hardware demand from economies fueled by pandemic-related stimulus programs.  

Chip-making is a cutting-edge technology sector and new capacity take time to build. Supply of raw materials that go into chips is also an issue as very few countries have them. While demand has boomed, factories in China and Vietnam have stayed shut for longer due to pandemic-related curbs.

Apple Falls on Report of Cut in iPhone Output Target Due to Chip Crunch
 

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