Chip shortages for iPads and Macbooks may bring down Apple's hot streak

Chip-shortages-for-iPads an-Macbooks-may-bring-down-Apple's-hot-streak

April 30, 2021: -After a shockingly strong quarter in which Apple revenue increased 54% to sales of around $90 billion, with double-digit growth in every product category, Wall Street is already asking if Apple can keep it up through the remaining of the year.

But it turns out Apple is dealing with the same microchip shortage that has snarled companies and industries worldwide, despite its legendary operations group, built by CEO Tim Cook, which locks important components in for years at competitive prices.

On Wednesday, Apple said that it expected its third-quarter sales to be around $3 billion to $4 billion less than it could be if it didn’t have supply issues, mainly for its iPad tablets and Mac laptops and desktops.

Cook said Apple’s issue was in “legacy node” chips that use older manufacturing methods compared to the bleeding-edge high-performance chips that are the soul of their devices.

Which parts were in short supply is still unclear. Still, Apple buys many legacy node chips to transmit data to displays, deliver power to cameras, decode audio, and manage batteries.

“Most of our issue is on licensing those legacy nodes; there are many different people not only in the same industry but across other industries that are using legacy nodes,” Cook said.

In the end, Apple struck an optimistic note, especially comparing the companies in other industries like autos, warning about chip shortages for months. For example, On Wednesday, Ford said that it would lose half of its second-quarter production because of the microchip shortage.

Apple emphasized that part of its forecasting supply shortages in the current quarter is due to the demand. iPad sales rose 79%, and Mac sales rose 70% in the latest quarter, so many people want to buy them.

Suppose there is a company that is built to weather supply chain challenges related to chips. In that case, Apple, which buys massive amounts of components each year, is an important enough client to prioritize chip manufacturers and designers.

One reason for Apple’s blowout second quarter is that it did not face any supply shortages in that period, Cook said, attributing it to its supply chain expertise.

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