Early in November, we had reported that Apple had curtailed iPad production by as much as 50% and diverted the chipsets to bolster iPhone 13 output. However, as we approach the holiday gifting season, there is a real fear that Apple may end up with reduced shipments of these two devices.
A report from Nikkei says this could be a "nightmare before Christmas" for Apple, as it battles chipset shortages, two years of lockdowns, and repeated energy cuts at its factories in China. The report goes on to suggest that this would be the first time in more than a decade where Apple was forced to halt production.
What went wrong?
Apple's factories in China regularly worked on overdrive during the annual Golden Week holidays, when Foxconn and Pegatron ramped up production. This year, the workers took holidays as the assembly lines were halted for several days due to the supply chain constraints and restrictions on power use in China.
The report claimed that post the launch of Apple's newest flagship iPhone 13 series and iPads in September, the deliveries have fallen short by millions of units. This has led to Apple missing production goals and revenue targets. With shipments still not back to normal, customers may end up looking beyond iPhones and iPads during this gifting season.
The company has already reduced iPhone 13 production targets by 10 million. Nikkei suggests that Apple actually missed September and October targets by 20%, which results in lower global shipments and a supply gap during the year's most important and high value sales window.
Apple annually churns out 200 million iPhones, 20 million MacBooks, 50 million iPads and more than 70 million AirPods. However, the supply chain chaos has meant that the company faced component shortages across the board, resulting in shipments often getting delayed, the report said.
When December started and holiday gifting got underway, Apple appeared to be on course to produce nearly 83 million of the 85 million units of the iPhone 13 series in time for the end of 2021. As of now, it appears as though it would fall at least 15 million short of the 230 million iPhones that it had targeted to produce this year.
However, Apple had seen it coming. Their CFO Luca Maestri confirmed that revenues from iPad sales during October-December quarter would drop considerably. Earlier, CEO Tim Cook had reported a $6 billion revenue drop during July-September quarter due to the "industrywide silicon shortage and Covid-19 related manufacturing disruptions."
Want to know about the latest happenings in tech? Follow TechRadar India on Twitter, Facebook and Instagram!
