Even America’s biggest company can’t save itself from a global shortage of crucial computer chips.
Apple just had a massive quarter thanks to sales of new iPhones, iPads and MacBooks, with revenue nearly hitting $90 billion. Sales of iPhones reached nearly $48 billion, a 65% increase over the same quarter last year, as consumers continued shelling out the big bucks to upgrade to Apple’s first 5G smartphone lineup.
But that wave of demand is now coming up against major supply chain issues resulting from the pandemic. In a call with analysts, Apple Chief Financial Officer Luca Maestri said that the company expects revenue will be $3 billion to $4 billion lower this quarter thanks to “supply constraints.”
That includes problems procuring chips, which are expected to affect the production of iPad and Macs.
“We’ll have some challenges in there, and challenges in meeting the demand that we’ve got,” CEO Tim Cook said on the call. Apple shares are still up nearly 3% in premarket trading.
Carmakers were among the first to sound the alarm about a shortage of microchips, which forced companies including General Motors, Hyundai, Ford and Fiat Chrysler to temporarily shut down plants.
On Wednesday, Ford warned that the chip shortage will get worse before it gets better, and will likely cut 2021 profits by about $2.5 billion.
Now, even top tech companies are dealing with the fallout.
Samsung told analysts on its earnings call Thursday that it’s working hard to rebalance production to reduce shortages of semiconductors and other key parts, which could weigh on sales of products like smartphones.
While the pain has spread from autos to consumer electronics, it won’t stop there. In a research note published last week, Goldman Sachs said that 169 US industries embed semiconductors in their products. The bank said its “working assumption” is that there will be a 20% average shortfall of computer chips for those affected.
The problem isn’t going away anytime soon.
“Because of the proprietary technologies, specialized machinery, and economics of scale needed to produce any given type of computer chip or component — and because many of the mature facilities are already operating near full capacity — the imbalance is likely to persist into the fall and possibly into 2022,” the bank’s analysts wrote.
Investor insight: Wall Street is tracking how shortages could hurt corporate earnings, but it’s also trying to puzzle out what they mean for inflation, which is being closely monitored by central banks. A reduction in supply, as fewer cars and tablets are produced, could contribute to higher prices.
Goldman Sachs thinks the price of affected products could rise by 0.7% to 3% this year, providing a “temporary” boost to inflation readings.
