Citing people familiar with the issue, reported on Tuesday that Apple Inc. (AAPL.O) plans to limit iPhone 13 production by up to 10 million units due to a global chip shortage.
By the end of this year, the company expects to have produced 90 million new iPhone models, according to Bloomberg. It’s been reported that Apple told its suppliers that the number of devices would be cut since chip vendors including Broadcom Inc (AVGO.O) and Texas Instruments (TXN.O) are struggling to supply components.
In after-hours trading, Apple shares fell by 1.2 percent, while those of Texas Instruments and Broadcom fell by roughly 1 percent each.
Apple has declined to provide a statement on the matter. When Reuters contacted Broadcom and Texas Instruments for comment, neither company immediately returned our calls or emails.
Apple warned in July that slowing sales growth and a shortage of chips, which had already hindered its ability to sell Macs and iPads, would constrain iPhone production. That month, Texas Instruments also published a dismal revenue prediction, indicating that chip supply concerns would continue into the following year.
Many automakers have temporarily halted production due to the chip backlog, which has put great pressure on a wide range of businesses, from automobiles to electronics.
Massive Purchasing Power And Long-Term Supply Agreements With Chip Vendors
As a result of its massive purchasing power and long-term supply agreements with chip vendors, Apple has been able to weather the supply crunch better than many other companies. This has led some analysts to predict that the iPhone 13 models released in September will have a strong sales year as consumers look to upgrade devices for 5G network.
This could be part of Apple’s regular launch practise where it overorders smartphones to prepare for a customer rush before cutting orders based on sales data. This is according to Jeff Fieldhack, research director at Counterpoint Research.
For the fourth quarter of 2018, it is expected that sales of the iPhone 13 would be steady and higher than those of the iPhone 12 from the previous year, according to Fieldhack.
Bill Berkrot and Leslie Adler edited the storey, which also included reporting from Chavi Mehta in Bengaluru and Stephen Nellis in San Francisco.