Apple Inc is likely to slash production of its iPhone 13 by as many as 10 million units due to the global chip shortage.
The company was expected to produce 90 million units of the new iPhone models by the end of this year.
Apple Iphone 13 Chip Crunch
The report said Apple told its manufacturers that the number of units would be lower because chip suppliers including Broadcom Inc and Texas Instruments were struggling to deliver components.
Shares of Apple fell 1.2 percent in after-hours trading, while Texas Instruments and Broadcom were both down about 1 percent. Apple declined to comment. Broadcom and Texas Instruments did not immediately respond to Reuters requests for comment.
In July, Apple forecast slowing revenue growth and said the chip shortage, which had started hitting its ability to sell Macs and iPads, would also crimp iPhone production.
Texas Instruments also gave a soft revenue outlook that month, hinting on chip supply concerns for the rest of the year.
The chip crunch has put immense pressure on industries from automobiles to electronics, leading many automakers to temporarily suspend production. With its massive purchasing power and long-term supply agreements with chip vendors, Apple has weathered the supply crunch better than many other companies, leading some analysts to forecast that iPhone 13 models released in September would have a strong sales year as consumers looked to upgrade devices for 5G networks.
Fieldhack said iPhone 13 sales appear to be healthy and higher than last year’s iPhone 12, and Counterpoint is not changing its estimate of 85 million to 90 million iPhone 13 sales for the fourth quarter.
Wide Spread Chip Shortage
Millions of products across multiple industries today rely on computer chips to run and semiconductor makers’ plants are currently working flat-out to meet demand.
Smartphone makers like Apple – some of the biggest chip purchasers in the world – have been severely impacted, but also other sectors like the car industry and the makers of video game consoles.In July, Apple chief executive Tim Cook warned investors that the semiconductor shortage could affect sales of the iPhone and the iPad.
Investment firm Wedbush estimates that Apple will be running a shortage of more than five million iPhone 13 units for the holiday season, if consumer demand continues to keep pace with the number of iPhones being shipped for the rest of this year.
“Taking a step back, 5 million to 10 million units moving out of the December quarter into the March quarter due to well-understood supply chain issues is not a worry for us and ultimately speaks to a stronger demand trajectory than Wall Street had been anticipating,” they said.