Exhaustive new report details supply chain ‘chaos’ impacting Apple’s iPhone production goals

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It’s no longer a big secret that a pretty much unprecedented global chip crisis has sent shock waves through the entire mobile industry this year, making it virtually impossible for companies like Samsung to stick to their “normal” product launch schedule and for the likes of Apple to handle smartphone demand ahead of and during the always busy holiday season.

Due to its sheer size, power, and influence over a large number of the world’s top chipmakers and parts suppliers, Apple was of course not impacted by the widely reported shortages to the same extent as some of its rivals. But according to an incredibly detailed piece published by Nikkei Asia earlier today, the industry-wide issues have “finally caught up” with the Cupertino-based tech giant in a big way.

Both iPhone and iPad production took a huge hit

While Nikkei’s fresh report is not exactly taking us by surprise, largely echoing the gloomy sentiment of several other articles based on word from the inside of the supply chain these last couple of months, it remains… fascinating (in lack of a better word) and deeply unsettling to hear about the degree of Apple’s troubles.
Poetically labeled a “nightmare before Christmas”, the production strain actually has its roots firmly planted all the way back in the political tensions between the US and China that ultimately brought about Huawei’s (Western) demise. “Critical components” used for the manufacturing of smartphones and tablets started to be hoarded far away from Apple’s reach nearly three years ago, and what initially seemed like a minor concern quickly turned into a major mess due to the ongoing coronavirus pandemic.

It was the pandemic that repeatedly shut down factories and severely limited assembly activities in places like Vietnam and Malaysia, and it was largely the pandemic that indirectly led to 20 percent fewer iPhone 13 units produced in September and October than originally planned.
If that sounds bad (which it definitely does), overall iPad assembly was affected even worse, ending up at around 50 percent below Apple’s initial goals for the same period. Meanwhile, “older” iPhone generations including the 12 and SE took a pretty bad hit of their own at 25 percent or so, and the worst thing about the whole situation is that little to no improvement was shown in November.
That obviously explains why devices like the iPhone 13 Pro and base iPad can no longer be shipped in time for Christmas in many countries by Apple itself for new buyers. Of course, you could always try third-party retailers or carriers, at least stateside, but that doesn’t change the unusually bleak overall holiday picture.

What’s a few billion dollars for a tech giant?

Naturally, the answer to that question is “a lot of money”, as it would be for anyone else, person or company. But while Apple is indeed looking at “missing out on billions of dollars of revenue” this holiday quarter, which is never good, its overall profitability shouldn’t be impacted by a very large degree, especially in the long run.

At least part of the consumer demand left unsatisfied these past few months will simply transfer to the first quarter of 2022, when sales were expected to decline sequentially and components suppliers could start catching up on their orders.

On the not so bright side of things, the pandemic is still raging on in many countries, and while chipmakers have very firm and ambitious plans to expand their production capacity, said plans may not materialize until 2023 “at the earliest.”

That means Apple might face another big crisis either after the launch of the highly anticipated 5G iPhone SE (2022) during the year’s first quarter or on the heels of the iPhone 14 family announcement next fall.
Until then, the company is looking at an estimated 2021 iPhone manufacturing total of 230 million units, down around 15 mil from an objective set at the beginning of the year, of which anywhere between 83 and 85 million devices will have carried the 13 branding. That’s not so terrible for a “nightmare before Christmas”, now, is it?

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