iPhone 13 Production Likely to Cut Down by Up to 10 Million Units Due to Chip Crunch: Report

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Apple is likely to cut production of its iPhone 13 by up to 10 million units due to the global chip shortage, Bloomberg News reported Tuesday, citing people familiar with the matter.

According to Bloomberg, the company is expected to produce 90 million units of the new iPhone models by the end of this year. According to the report, Apple told its manufacturers that the number of units would be fewer because chip suppliers like Broadcom and Texas Instruments are struggling to supply components.

Apple shares fell 1.2 percent in after-hours trading, while Texas Instruments and Broadcom were each down about 1 percent.

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

In July, Apple forecast slowing sales growth and said the chip shortage that had affected its ability to sell MacBook devices and iPad models would also affect iPhone production. Texas Instruments also gave a weak sales outlook this month, indicating chip supply concerns for the remainder of the year.

The chip crisis has put industries from automotive to electronics under great pressure and has caused many automakers to temporarily stop production.

With its enormous purchasing power and long-term supply contracts with chip makers, Apple weathered the supply crisis better than many other companies, leading some analysts to predict that the iPhone 13 models released in September would have a strong year of sales as consumers upgraded were looking for devices for 5G networks.

Jeff Fieldhack, director of research at Counterpoint Research, said Apple’s reported production cut could also be part of the iPhone maker’s normal roll-out process of over-ordering devices to prepare for an initial rush of customers and then cutting orders when sales trends become clearer .

Fieldhack said iPhone 13 sales seem healthy and higher than last year’s iPhone 12, and Counterpoint isn’t changing its estimate from 85 million to 90 million iPhone 13 sales for the fourth quarter.

© Thomson Reuters 2021

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