Apple Set to Cut iPhone Production Goals Due to Chip Crunch
Due to processor shortages, Bloomberg News reported on Tuesday that Apple may produce 10 million fewer iPhone 13s in 2021 than it had anticipated.
According to Bloomberg, Apple had planned to produce 90 million new iPhones from October to December this year, but the company has informed its manufacturing partners that the new number will be lower due to supply shortages at chip component manufacturers such as Broadcom and Texas Instruments. (Texas Instruments provides display components, whereas Broadcom provides wireless components.)
In the iPhone’s logic board, which interconnects the circuitry underlying the various components and helps them cooperate with one another, several sorts of chips that perform a range of purposes are housed. A logic board was once described to as “a club sandwich of chips” by TechCrunch.
Broadcom doesn’t have its own plants, so it relies on contract chipmakers like Taiwan Semiconductor Manufacturing Co. to create its goods. According to Bloomberg, while Texas Instruments manufactures some parts in-house, it also relies on third-party suppliers.
The iPhone is not the only product facing tight availability.
Other items, such as the Apple Watch Series 7, appear to have been affected as well. Chip manufacturing is currently dominated by Taiwan and Korea on a global scale. According to James Lewis, senior vice president and director of CSIS’s Strategic Technologies Program, only 12% of chips will be created in the United States by 2020. President Biden suggested investing $50 billion in semiconductor manufacturing and research in his infrastructure bill earlier this year. Experts predict that when demand for new consumer electronics exceeds the capacity to generate these chips (especially with factories closing and port activities bottlenecked owing to COVID), consumers will face delays and price increases for devices that require chips or semiconductors.
According to Reuters, Apple claimed supply chain management and maintaining a supply buffer helped them avoid challenges meeting demand earlier this year. However, Apple is currently competing for chip-making capacity in older factories with other businesses.
Apple, like other companies that rely on microchips or semiconductors in their products, now appears to be experiencing the consequences of the global chip shortage.
“Shipment times on many iPhone Pro/Pro Max in the US have gone from October 22 to November 19 (as of today), speaking to supply chain delays,” said Daniel Ives and John Katsingris in a Wedbush research report on October 12. “It’s just a timing issue of iPhone units shipping to customers with supply chain constraints rampant across Asia,” according to the report, which “ultimately speaks to a stronger demand trajectory than the Street had been anticipating with supply chain constraints now needing to reduce builds due to component shortages.”