The global chip supply shortage is hitting Apple even harder than it had anticipated. A new report claims that Apple has cut back on iPad production and instead diverted the chips for iPhone 13 production.
Citing “sources briefed on the matter,” the Nikkei Asia report claims that Apple has cut down iPad production by 50 percent from its original plans. Additionally, the Cupertino company is also allocating parts for older iPhones to iPhone 13 production. Several chips that Apple uses are shared between the iPad and iPhone, allowing Apple to allocate them between its devices as per demand and supply.
With the worst of the pandemic over, Apple expects demand for the iPad to decline. So, the company is prioritizing iPhone 13 production as it expects stronger demand for it. The holiday quarter is usually the most important one for Apple for the sale of new iPhones, so the company diverting resources and allocating more resources to its production should not be surprising.
“The scale of iPhone shipments of around 200 million units a year is much bigger than that of iPads. Apple’s most important and critical ecosystems are all surrounding iPhones, its iconic product. To add one more point, iPads do not have that strong seasonality like its flagship iPhones, which are always launched in autumn,” said Brady Wang, a tech analyst with Counterpoint Research.
The move means customers looking to buy a new iPad will have to wait longer than expected. Orders placed now for an iPad with 256GB storage on Apple’s online store will only be delivered by December 15. Wait times in China for new iPads also extend up to six weeks.
Apple estimated a $6 billion hit to its revenue in the previous quarter. With the chip shortage worsening and the availability of almost all Apple products extending to a few weeks, the company is looking at a bigger revenue hit this quarter.[Via Nikkei Asia]