Apple is likely to cut production of its iPhone 13 by as many as 10 million units due to the global chip shortage, Bloomberg News reported.
The company was expected to produce 90 million units of the new iPhone models by the end of this year. Apple told its manufacturers that the number of units would be lower because chip suppliers including Broadcom and Texas Instruments are struggling to deliver components.
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.
TrendForce in September predicted that total iPhone production for 2021 is expected to reach 229.5 million units, a 15.6 percent increase, with the upcoming iPhone 13 models accounting for about 37-39 percent of Apple’s annual iPhone production.
In addition, iPhones are expected to account for about 77 percent of total annual production of 5G smartphones in 2021, making them the market leader in this segment and representing a drastic increase from 39 percent in 2020, TrendForce said earlier.
Apple has weathered the supply crunch better than many other companies due to its massive purchasing power and long-term supply agreements with chip vendors. Some analysts 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.