The Supply Chain Matters blog provides our latest updates for our blog column- Global Supply Chain News Capsule Follow-Up. In our efforts to provide readers with the complete story, this capsule presents a series of brief blogs that revisit prior supply chain developments that we have shared with readers.
In a posting in October, we shared with readers that global consumer electronics and smartphone provider Apple had reportedly been impacted by the ongoing global wide semiconductor shortage. In our commentary, we observed that even Apple, with its supply network influence, may not be immune to the global output shortages of semiconductor chips.
With the all-important holiday fulfillment period fast approaching, Bloomberg reported that Apple iPhone13 production targets could be trimmed by as many as ten million devices in the fourth quarter because of prolonged semiconductor chip shortages. The smartphone provider had initially communicated to supply network partners to plan ninety million units of the new iPhone model. Reportedly, the company then had to communicate to suppliers that output of the newly announced model would have to be trimmed.
Last week, Nikkei Asia, citing multiple informed sources, reported that Apple has internally prioritized allocation of key processors to support the newly announced iPhone 13 production output. (Paid subscription or metered view)
Supply plans for both Apple iPad production, along with older iPhone models have been cut back from original plans in order to allocate any available core and peripheral semiconductor chips to production output needs for iPhone 13’s. Such a component allocation plan was similarly initiated last year to support the initial production volumes for the Apple iPhone12. With the seasonality nature of new iPhone models being announced in September in anticipation of holiday related buying, the scope of potential volume of sales looms in the millions.
One of the implications of this reported allocation is that sales of iPad models have been on the rebound because of remote working, learning and training needs. Reportedly, total shipments of iPads were up almost 18 percent for the fist nine months of this year. Because the tablet, as well as older iPhone models share common processors, Apple’s sales and operations and product management can initiate such allocations. As one might speculate, product margins for the newly announced iPhone models are higher as well, contributing to expected profitability outcomes.
Thus, how Apple eventually performs in this upcoming holiday quarter will be an indication of the company’s supply network agility in the midst of a key component shortage.
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