Apple 'may cut iPhone production' due to chip shortage

13 October 2021

Apple may be forced to cut production of its latest iPhone model by 10m units because suppliers are struggling to secure semiconductors, it has been claimed. 

Apple was expected to produce 90m models of the iPhone 13 in the months running up to Christmas, but it warned manufacturers this number could be significantly lower as the company’s chip suppliers Broadcom and Texas Instruments are struggling to produce enough semiconductor chips, according to Bloomberg.

Apple’s shares drop by as much as 1.2% in after-hours trading following the reports.

The global semiconductor shortage has rocked global tech and automotive supply chains after increased demand for electrical goods during the pandemic. 

In addition to concerns over the availability of its latest iPhone, the company is also reported to be struggling to get enough chips for its latest Apple Watch and other products. 

Apple’s supply issues have been exacerbated as one of its suppliers, Broadcom, relies on contract chipmakers, including Taiwan Semiconductor Manufacturing Co, which is one of the world’s biggest chip manufacturers. 

Another Apple supplier, Texas Instruments, manufactures some chips in-house, however it also relies on external manufacturing, meaning both suppliers are subject to global competition for chips.  

Research by the Susquehanna Financial Group found lead times for chips are drastically increasing, rising for the ninth consecutive month in September to reach an average of 21.7 weeks. 

The news comes after Intel boss Pat Gelsinger warned the US and Europe are too reliant on Asia for supplies of semiconductors.

Google announced it was being forced to delay the rollout of a new phone in India in September, and customers have met with shortages of the latest Sony Playstation. 

General Motors announced it was closing half of its North America plants, and Toyota cut September production by 40% due to the shortages. 

It is estimated 7.7m fewer cars have been built in 2021, costing the auto industry £159bn.

Apple has been approached for comment.

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