Why there is a Shortage of Apple Products??

Apple had planned to create 90 million new iPhones in the last three months of the year, but due to component shortages, it is now informing manufacturing partners that the number will be lower. According to sources familiar with the situation, Apple Inc. is expected to cut its planned iPhone 13 production objectives for 2021 by as many as 10 million devices due to persistent chip shortages. They are having difficulty delivering adequate components, according to the sources, who did not want to be identified since the issue is confidential.

The tech giant is one of the world's top semiconductor purchasers, dictating the electronics supply chain's yearly pattern. Apple, however, is dealing with the same supply interruptions that have caused havoc on sectors throughout the world, despite its enormous purchasing power. Demand will continue to outstrip supply throughout next year and maybe beyond, according to major chipmakers. Texas Instruments provides Apple with display components, while Broadcom has long been the company's wireless component provider. The powering of the OLED display is one of the TI chips in low supply for the newest iPhones. Other vendors are also running out of parts for Apple. Representatives from Apple and Texas Instruments declined to comment.

Shipment- ''Currently Available''

In late trading, Apple shares fell as much as 1.6 percent to $139.27. Through Tuesday's closing, the stock had gained 6.6 percent this year. In after-hours trade, Broadcom and TI both fell. Apple's capacity to supply new models to consumers has already been hampered by the constraints. The iPhone 13 Pro and iPhone 13 Pro Max were released in September, but orders placed on Apple's website will take roughly a month to arrive. The new gadgets are also "currently unavailable" to grab at a number of the company's retail locations. Shipment delays are also being experienced by Apple's carrier partners.

Current orders are expected to arrive in mid-November, so Apple may still be able to deliver the new iPhones in time for the holiday season. The year-end quarter is anticipated to be Apple's most profitable yet, with revenue of over $120 billion. That's a 7% increase over the previous year and more than Apple produced in a single year a decade earlier. Apple's problems illustrate that even the digital world's king isn't immune to worldwide shortages exacerbated by the epidemic. Along with a limited iPhone supply, the firm has struggled to meet the demand for the Apple Watch Series 7 and other goods. 

The Real Constrain

Apple cautioned earlier this year that it would encounter production difficulties for the iPhone and iPad in the September quarter. Broadcom does not have its own manufacturing facilities and instead works with contract chipmakers such as Taiwan Semiconductor Manufacturing Co. to produce its products. Texas Instruments manufactures certain chips in-house but also outsources others. This means they're struggling for manufacturing capacity at TSMC (Taiwan Semiconductor Manufacturing Company Limited) and other manufacturing facilities, which is becoming exceedingly challenging. Apple is a TSMC customer, and it is the company's largest.

Apple's A-series CPUs are made by the company, although they don't appear to be any shortages at the moment. There are indicators that the chip shortage is increasing. According to Susquehanna Financial Group, the time between placing a semiconductor order and receiving delivery increased for the ninth month in a row in September, reaching an average of 21.7 weeks. The US Department of Commerce is asking global chipmakers to reply to a set of questionnaires by Nov. 8 to assist unravel supply chain scowls, but legislators and businessmen in Taiwan and South Korea are opposing the initiative.

Separately, a long-running energy issue in China might add to Apple's woes. TPK Holding Company, an Apple supplier, announced last week that owing to local government power limitations, its companies in the southern Chinese province of Fujian are altering their production plan. This comes less than two weeks after Pegatron Corporation, an iPhone assembler, implemented energy-saving measures in response to government-imposed power restrictions.

Final Report

So far, Apple's massive magnitude has allowed it to maintain first priority with suppliers for available capacity, with no significant impact on the iPhone. However, it is not immune, and this recent study indicates that supply chain chaos may harm iPhone sales in the near future. 

On October 28, Apple will release its next earnings release, in which it will inform investors how well the iPhone 13 is selling and presumably provide some insight into the supply issue.