Apple’s iPhone hot streak is going to run into the global chip shortage

Apple reported a blowout quarter on Tuesday, driven by sales of iPhones, which were up 50% annually to $39.57 billion in sales. That followed the March quarter, where iPhone sales were up 65.5% annually, and Apple’s holiday quarter, where sales were up 17% to $65.60 billion. The iPhone is on a hot streak driven by last year’s release of the iPhone 12, which is the first significant iPhone redesign since 2017. Current iPhone consumers are upgrading to the first iPhone with 5G, and many people are switching from an Android phone, Apple CEO Tim Cook said on Tuesday.

But Apple now faces an issue that has ensnared everyone from game console makers to automotive companies to Microsoft’s PC business: An industry-wide shortage of chips and other components. On Tuesday, Apple CEO Tim Cook warned silicon “supply constraints” will affect sales the iPhone as well as the iPad.

Cook said that the shortages aren’t in the high-powered processors that Apple has manufactured for its devices, but in what’s called “legacy nodes,” or chips that do everyday functions like driving displays or decoding audio, and can be manufactured using older equipment.

In the case of other component shortages, he attributed it to demand outstripping Apple’s own forecasts. “We do have some shortages in addition to that, that are where the demand has been so great and so beyond our own expectation that it’s difficult to get the entire set of parts within the lead times that we try to get those.”

Apple’s shares sank about 2% after hours following the earnings release, despite the blowout quarter.

Apple’s iPhone hot streak is going to run into the global chip shortage, CNBC, Jul 28