Apple likely to cut iPhone 13 production due to chip crunch

Apple likely to cut iPhone 13 production due to chip crunch

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Apple Inc (AAPL.O) is likely to slash production of its iPhone 13 by as many as 10 million units due to the global chip shortage, Bloomberg News reported on Tuesday, citing people familiar with the matter.

According to Bloomberg News, the company expects to produce 90 million new iPhones by the end of this year. According to the report, Apple told its manufacturers that as chip suppliers including Broadcom (AVGO.O) and Texas Instruments (TXN.O) are working hard to deliver components, the number of products will decrease.

Apple shares fell 1.2% in after-hours trading, while Texas Instruments and Broadcom both fell about 1%.

Apple declined to comment. Broadcom and Texas Instruments did not immediately respond to Reuters’ requests for comment.

In July, Apple predicted that revenue growth would slow down, and said that chip shortages have begun to affect its ability to sell Macs and iPads, which will also limit iPhone production. Texas Instruments (TI) also gave a weak revenue outlook that month, hinting at chip supply concerns for the rest of the year.

The chip crunch has put tremendous pressure on industries such as automobiles and electronics, causing 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.

Jeff Fieldhack, research director for Counterpoint Research, said the reported Apple production cut could also be part of the iPhone maker’s normal launch process of over-ordering devices to be prepared for an initial customer rush and then trimming orders as sales trends become clearer.

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.

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